If you are in the middle of implementing SAP (or any other software package), you already have a lot to think about. But what should you expect in terms of your Recovery Audits and what should you be doing, now, to make life easier later? Too often, clients focus so much on making it to “go live” that they don’t look ahead at how the implementation will affect payment processes and recoveries.

First, what to expect?

Most retailers will experience a large spike, as much as 60%, in recoveries after an implementation. Recoveries often increase significantly in Annual Rebates, Promotional Allowances and Duplicate/Erroneous Payments.

What causes the spike?

The problem is not the software—the SAP Retail module now handles both the volume of transactions and the complexity required by the retail industry. The primary culprits are data quality and user errors.

Many payment errors can be attributed to insufficient controls and quality checks on the data conversion and data entry processes. A large volume of data must be transferred from an old system (or systems) into SAP. For pricing and multiple layers of SKUs, some of the data (or even most, depending on the legacy system) is entered manually. Data entry often falls to temporary workers who do not have the expertise to make sense of, or properly code, complicated terms and allowances.

Unfortunately, this master vendor data feeds all of the payments processes.  The quality of transactions will depend upon the quality and integrity of the data entered into the system. In one Americas SAP Users’ Group (ASUG) survey, 93% of respondents said that data management issues negatively impacted their projects.

The other culprit is related to the ongoing use of the system. Even with training, users will make mistakes in data entry and clearing and in reconciling unfamiliar error and exception reports until they have been on the system for many months. Some of the most common, ongoing challenges include: duplicate payments, invoice-to-PO matching, variance handling, treatment of under-charges, credit notes and memos, family product management, deal and promotion time frames, conditional allowances, and correcting GR/IR Balancing.

The good news is that the spike in recoveries is just that—a spike. Based on the experience of other large retailers, the dollar amount of recoveries will subside back to, or below, the old base level.

Critical success factors for a smoother ride

But what can a retailer do now to lessen the impact of implementation-related payments errors? Retailers, like many others, may tend to overlook some of the critical success factors for ensuring a smoother transition to SAP (or any other AP system), believing that their integration partners will surely have it covered. Our clients’ experiences suggest the following critical success factors are too important to leave to someone else:

• Elevate the importance and visibility of data conversion, data governance and testing.
• Assign the best people you can, full-time, to the project. Information is key to a retailer’s success, so don’t let responsibility for the underlying data fall to anyone other than dedicated and capable resources.
• Emphasize training on the new system as something more than an afterthought. Adequate and reinforced training for day-to-day processes as well as for understanding and reconciling new error and exception reports can minimize potential trouble spots.

Finally, although it may be the last thing on anyone’s mind in the midst of an implementation, planning now for future recovery audits can save the company time and money. PRGX’s GetSAP tool (certified by SAP) can be embedded during implementation; it will extract the data needed for a recovery audit automatically, saving lengthy data processing and retrieval on the client side. Without it, recovery audits often require several iterations with IT to define the data needed, identify where data resides and pull the necessary data.

There is a tendency, because of the complexity of SAP implementation activities, for clients to want to delay planning for external and internal auditors, thinking instead to deal with audit and correction considerations after the implementation is complete. Postponing these considerations can impact performance and prove more time-consuming and costly. We all know that certain types of errors will occur in any system implementation; the sooner you can begin taking steps to both avoid and rectify errors, the better.

Contact us at .(JavaScript must be enabled to view this email address) if you need help managing your recovery audit efforts through major systems implementations.