Modernizing commercial compliance: moving from historical reviews to pre-payment analysis with Compliance IQ.
Realize the power of Compliance IQ
Incorporating a digital commercial compliance methodology to monitor and enforce your contracts on a real-time basis, can support your supply chain strategy with enhanced responsiveness, agility and flexibility.
What is Compliance IQ?
Compliance IQ is a service that uses a custom-built intelligent automation tool and a team with deep commercial knowledge to support contract management processes. It provides real-time identification of third-party commercial and billing mistakes, preventing millions in overpayment. Compliance IQ offers a scalable and automated review of invoice line item details, reducing the need for sampling and manual effort.
Current challenges with commercial compliance
- In our experience, 3%-5% of invoice charges are incorrect. Third-party invoices often contain mistakes and overbillings. If unmanaged, the majority of these are left unidentified and paid.
- A significant amount of time and resources are spent reviewing third-party charges. Most organizations have some manual processes in place to review invoices. They can be error prone, vary by individual and require sampling, and are labour intensive.
- Recovering costs after paying them can be difficult and can damage vendor relations. Commercial compliance that relies solely on vendor audits of past spend can result in findings that are hard to collect and can lead to difficult conversations with vendors and employees.
- Strategic sourcing benefits can be lost within months of signing. Organizations can gain significant cost savings through strategic sourcing. However, much of that savings can quickly evaporate if charges are not actively compared to new contract terms.
What EY can do for you
Like many traditional professional services, commercial compliance has evolved thanks to recent leaps in advanced analytics and the development of self-service data analytics tools. Compliance IQ has been developed to mitigate issues stemming from historical vendor audits and is aimed at achieving cost avoidance rather than cost recovery.
Automation of commercial compliance activities enables organizations to effectively conduct a full vendor audit every time an invoice is received. Identifying mistakes and noncompliance before paying an invoice has significant benefits.
Compliance IQ findings and trends are visualized through an easily understandable and interactive dashboard set, allowing ease of access to relevant data in one succinct and meaningful report. The dashboards also help prompt vendor-targeted questions related not only to commercial compliance, but to ongoing operations between an organization and its vendors, and help identify potential efficiencies.
Compliance IQ benefits
Estimated savings of 1%-5% of the contract’s value
Identifies overcharges and provides the necessary documentation to resolve billing.
Noncompliance in real time
Negotiations yield better results since noncompliant and unsupported charges are flagged and discussed in real time before invoices are paid.
Obtains valuable vendor insight and performance data to improve processes and decision-making. Ambiguities in the contract terms can be clarified or corrected in real time while the contract is still active.
100% compliance testing
Automated testing allows for assessment of the complete volume of spend and allows for consistency in testing methodologies and reduces error rate.
Reduces manual effort
Frees up cost controllers and contract managers to resolve issues with vendors instead of spending time gathering data, and frees up project staff to perform more important core tasks.
Demonstrates compliance to internal stakeholders
Provides stakeholders with visibility into vendor management to demonstrate that commercial risks are actively being mitigated.
What will modernization do for you and your organization?
These benefits are enabled through data visualization dashboards. This allows for efficient discovery of exceptions and analysis of compliance trends, which leads to increased visibility of project progress and spend analysis.
Organizations that are eager to fully harness the benefits of the program can use the Compliance IQ program for benchmarking vendor performance and to compare against other projects across the enterprise.
Compliance IQ is the modern approach for organizations to digitize their commercial compliance. By enhancing and accelerating vendor compliance with technology, industries can continue their shift towards the digital future. The strength of building a Compliance IQ incorporates all forms of data in a variety of ways to draw conclusions and understand substantial data trends. From card badge systems to drone and satellite tracking, the program can be easily adapted to whatever data is available and scaled to incorporate more information as it becomes available.
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