Global Pace of M&As

Create Stress in AP

Through an AP audit, a company will immediately gain a better understanding of their financial health from identifying errors in the AP process and documentation. 

Global mergers and acquisitions (M&A) hit an all-time high in the post-pandemic era with steady, regular increases.  Since 2021, M&A activity reached $2.3 trillion, a 15% increase over the same period in previous years. While the pandemic slowed M&As, the market never hit a zero-deal volume.  Instead, the pandemic exposed weaknesses in corporate structures and presented opportunities for businesses to reinvent and realign their processes and valuation.  The EY-Parthenon Digital Investment Index says 55% of the top 1,500 global companies are pursuing inorganic investments, including digital mergers and acquisitions (M&A), to speed innovation (“How M&A Revenue Synergies Can Sweeten Digital Transactions.” 26 Jul 2022, ey.com). With this rapid mobilization, companies failed to factor the serious strain on their back-office processes, i.e., the impact of those M&A’s to accounts payable.

Industry experts have laid out essential steps towards completing a successful integration:

1. Meet with Accounts Payable personnel to understand each other’s position, policies, procedures, and vendor base.
2. Understand how ERP data is maintained. The acquiring company should thoroughly understand how the masterfile is structured and administered – numbering format, invoice entry style, PO policies, etc.
3. Review contracts in place. Understanding terms, products/services provided, return policies, freight guidelines, and discounts is key to determining which vendors will remain in play and which need to be eliminated.  Don’t be hesitant to speak with the suppliers to review AP balances and negotiate new terms.
4. Conduct a comprehensive AP audit to identify overpayments, open credits, and billing discrepancies.

“It is vital that the new company engage with a third-party AP Recovery Audit provider to confirm payment integrity while also identifying any weaknesses in the payment processes and procedures of the newly created company,” said Frank Broniec, CEO at Broniec Associates, Inc.

A comprehensive AP review has multiple benefits.  The company will immediately gain a better understanding of their financial health from identifying errors in the AP process and documentation.  Auditors identify overpayments in multiple categories including duplicate and erroneous payments, open credits, rebates, discounts, open debit balance items, freight, pricing, exchange rates, and tax.  A review will also confirm contract compliance and determine if there are any discrepancies or terms that might need addressing.  Broniec Associates (www.broniec.com) also provides invaluable analysis to help clients streamline their AP processes for optimization.  As an added benefit, they facilitate the recovery.