Plugging financial leaks with generative AI

The company's Canadian division, with an annual supplier spend of over $5 billion, had its contracts designed to support expansion into new markets. However, in practice, they became a constant drip of financial leakages.

Here's why:

• Untapped earned income: Discrepancies between contracted and billed allowances and rebates agreed with suppliers – known as earned income – led to lost income
• Price deviations: Tailored price agreements between suppliers and end customers created inconsistencies and reconciliation errors
• Limited visibility: EI payments to vendors included exclusions for established customers, but tracking and executing these exclusions was very difficult
• Data overload: The sheer volume of contract data made manual audits overwhelming, causing leakages to pile up

After a deep dive into the current earned income processes, we put the power of generative AI, advanced analytics, and our audit expertise to work to obtain controls assurance, including identifying leakages in the current EI processes

We began by bringing together key stakeholders to agree on the key areas of risk and inefficiencies. Mismatches in contracted versus billed EI, exclusions agreed versus delivered, and deviations provided versus compensated were the biggest risk areas.

Our AI-powered Post-Payment Audit solution, built on Azure and powered by Databricks, was brought in to help. It scanned contracts using generative AI to mine critical earned income terms and conditions, often buried in different formats. By analyzing them against multiple datasets like earned income, sales, purchases, master data, and billing data, we could pinpoint anomalies.

Our audit experts then validated the anomalies and revealed points of failure, their root causes, and savings opportunities. They even engaged with suppliers to reconcile shortages and be held accountable for recovering funds effectively.

Beyond recovery, we worked with earned income process teams to introduce controls and governance frameworks based on insights from the anomalies, to reduce the risk of future leaks.

The new solution for managing earned income will help the company now and long into the future. Some of the key benefits of our work together include:

• A healthier bottom line: Within six months, the company realized $1 million in P&L savings
• Greater governance: Fixing root causes and tighter controls reduced financial leakages by about 70% by year two
• Increased transparency: Data-driven insights empowered the company to better monitor and manage earned income

By combining digital tools, strategic audits, and long-term process fixes, we helped the company turn complexity into clarity.