Did you know that linen loss accounts for an average of $840 million each year? That is relatively high even for an industry with revenues exceeding $5 billion, as per market research conducted by IBIS. These figures can be arrived at by viewing your historical billing, the current usage, etc. A detailed analysis undertaken by auditors providing uniform and linen audit service will investigate overcharges, increases that were not scheduled, etc., and help maximize your profits.
What is Billing Audit Analysis?
A billing audit is a scientific method of recording the actual charges appearing in the bill and comparing that with the figures that should have appeared in the bill as per the original contract. This billing audit will reveal whether you have been overcharged. Detecting such anomalies is accomplished by going through your historical billing data, which is analyzed and compared with the information present in your original contract.
Some of the services offered by a uniform and linen audit service provider include:
- Billing audits of all types of uniform and linen providers, local and regional.
- A detailed evaluation that goes into the cost-effectiveness of every charge appearing on the invoice and vendor contracts.
- Detailed reports will reflect overcharges and other errors, which will indicate the areas of cost savings.
- Backed by facts and figures, a renegotiation of the existing contracts and agreements will lead to significant savings due to changes in vendor pricing.
- Rephrasing contract terms and conditions to protect your interests and not of the vendor.
- They are ensuring that the new charges are continuously monitored and reflect in your uniform and linen expenses. The trick lies in bringing the costs down and holding them there to show consistent savings in the long term.
How does the process work?
The process involves scientific uniform and linen audit to evaluate your uniform and linen rental contracts and decide on the options available to reflect in significant savings through the long and short term solutions the auditors suggest. A detailed analysis of the historical billing, the contract terms, and conditions, including current usage, will be documented as a ready reckoner.
The analysis and evaluation help decide whether there is any deviation from the contract and whether the vendors keep their word as per the original contract.. You may even be overcharged for specific items that did not figure in the original agreement, the detection of which will lead to further cost savings.
Areas where costs can be reduced
The team of experts works with leading uniform and linen companies. They are adept at spotting the areas where costs can be trimmed and money saved. The uniform and linen services industry has organizations that usually enter into monthly contracts, which can be changed quickly if required.
Even if you plan to enter into long-term contracts, especially if there is some benefit, the contract terms need to be checked thoroughly. The uniform and linen audit firm will undertake to do that on your behalf.
Inventory Management
Efficient inventory management practices are further enhanced when the auditors conduct an audit of the linen room. Even disorganized storage and an inefficient inventory management system can lead to losses.
Remember that your expenses are not restricted to uniforms and linen, leaving you with other areas of potential savings. Only an expense audit will reveal how the money is being spent, and any scope exists for trimming expenses to save money. If any past overages are established, you can get refunds, which you are entitled to.
Why Third-Party Auditing, and how does it help?
Third-party auditing is very effective as the auditors are unbiased and can detect hidden losses that would otherwise go unnoticed. That’s one reason why the American Accounting Association recommends third party auditing.
Moreover, third party audit firms would have conducted audits in different environments and are aware of the best practices that add strength to existing contracts and suggest necessary changes that will directly contribute to significant savings. A third-party audit firm is known to make neutral assessments and reviews of its systems and processes, which cannot be expected from the regular internal staff.
Third-party audit firms can present an accurate review of occurrences in multiple environments. Internal audits are often taxing and take up most of the limited resources available at your disposal. Whereas a third-party audit firm takes over and lets you focus on your core competencies while they go about their business to help increase your savings through prudent auditing methods they deploy.
Summing it Up
While small losses often go unnoticed, it takes the eagle eye of a third-party audit firm to detect such anomalies and plug them. It is well worth spending on third-party auditing as there are tangible results brought about by unbiased auditing.
