Why Are Invoice Checks Important? – A Q&A with Head of Technical Consultancy, Alistair Matthewson

18th September 2018
Contributor:
Alistair Matthewson
Alistair Matthewson

We caught up with card processing specialist and Head of Technical Consultancy, Alistair Matthewson, on why conducting regular audits of your card arrangements is so important.

Can you tell us a little bit about what’s involved with an invoice audit?
It’s a holistic look at a client’s historical card processing invoices where our analyst team runs granular checks for errors including overcharging, misapplied rates, and hidden or “phantom” fees. We typically review 12 months’ or more of invoices, as this allows us to consider seasonality and other annual trends that might not be visible from looking at just a few months’ worth of data.

What are some of the most common errors you find during these reviews?
The kinds of errors we find vary from merchant to merchant and supplier to supplier, which is why we approach each project in a tailored way unique to each client. We recently conducted an invoice audit for a large U.S.-based client as part of a card processing optimization project and found numerous errors which were costing the client six-figures annually. The first was a misapplied rate, occurring due to human error (from the processor). The client was being charged a higher fee per transaction than the standard rate despite the transactions being categorized at “standard”. Another large error that was found was as a result of platform limitations on the supplier side. The supplier’s system was not correctly set up to be able to apply the correct network fees to certain transactions. The merchant believed that these fees were non-negotiable pass-through cost, so they weren’t assessing or reviewing these fees in great depth. After investigation, it was identified as an error that was being rectified with platform development, but in the interim this resulted in a six -figure annual rebate for our client to cover the error in fee calculation.

Any advice for merchants wondering if they have errors in their invoices?
There are over 700 possible charges and fees on your card processing invoices – this is a huge amount and they change very often! This means that errors are not only possible but likely, so it’s important that you regularly review your arrangements and have full visibility of your fees. Maintain an ongoing dialogue with your processor and flag any concerns with your account manager.

A recent overcharge we identified for a client amounted to a significant six-figure sum that we were able to get back from the processor, as well as correcting for the future state.

Alistair Matthewson | Head of Technical Consultancy

What other kind of errors do you commonly see?
We wrote a blog a few weeks ago that highlighted seven reasons your invoices might contain errors. These included misapplied rates, umbrella charges, hidden or “phantom” fees, rounding up, keying errors, pass-through fees, and non-standard transactions. For more information on these I would recommend you read our blog here.

Where do you get the information needed for an invoice review?
We get this information either directly from our client’s, or often we get a temporary log-in to our client’s management information with their supplier, and we get everything we need directly from that portal. This means our clients need to provide very limited (if any) internal resource to the audit. Sifting through invoices can be extremely time-consuming for internal teams – especially when we’ve seen invoices that are thousands of pages long. Having an external audit conducted means our clients can be assured their invoices are correct without having to commit internal resource.

There are substantial savings available for merchants that regularly review their processing arrangements. To discuss a holistic card processing review and invoice audit get in touch with our team at info@cmspi.com.

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