Cost Recovery

Book Review: Cost Recovery by Richard Lanza

Dave Kinnear1-On Leadership, Book Reviews

Mr. Lanza has authored an excellent how-to book for auditing your accounts payable functions to determine how you might recover costs for your company. This 300 page textbook (not including appendices) is logically organized, clearly written and meant to be a work guide. While I read it from front to back, I can easily imagine jumping in at a chapter that addresses an issue I wish to tackle in my company.

The first two chapters make the case for the benefits and outlines the usual obstacles to getting recovery projects started. They also make it clear why, for many companies, it will make sense to first start with a service provider in this field and then, perhaps, continuing the audit work on your own. Each time you begin a project in a new area, bringing in a skilled cost recovery specialist helps you determine best practice that you can carry forward. Annual audits of your processes from an outside firm will ensure that personnel conflicts or process changes are corrected.

Chapters three and four focus on how to assess and prioritize projects and gives a history of how the overall Cost Recovery Market works. Chapter five begins the details, including excellent case studies, on how to audit accounts Payable and Procurement. Chapter six addresses Advertising and Media cost reviews; chapter seven addresses benchmarking, and chapter eight provides insight into escheatment (unclaimed property). Chapter nine reviews auditing of freight invoicing; chapter ten delves into health and benefits; chapter 11 addresses leases. Chapter 12 looks at the process of order to cash and how to improve that process while chapter 13 gives some insight into how we might find cash in payroll tax credits. The next two chapters, 14 and 15, specifically look at fraud in general operations and projects respectively. Chapter 16 gives an overview of real estate cost segregation; 17 is R & D tax credits and 18 looks at Strategic sourcing issues. Chapters 19 through 21 discuss issues around Telecommunications, Travel/Entertainment, and Utility reviews.

Chapter 22 gives clear insider knowledge on how to select a service provider to help you get started with Cost Recovery. Chapter 23 discusses the technology used in recovery efforts (as you might imagine, there are many software packages available to help as well as procedures to follow). And finally, Chapter 24 brings all of the concepts to summary with a conclusion.

Most of the chapters have case studies and each has a section on conclusions to be drawn from the preceding details. The five appendices are full of information from additional reading on the topics around Cost Recovery to “Tapping the Strategic Potential of Procurement.

This book should be on every financial manager, controller and CFO’s desk. Especially in today’s environment of limited credit and tight cash flow, it seems imperative to me that companies of all sizes should be concerned with check and triple-checking to be sure they are gaining all the cash advantages the possibly can. To assume we know what we are doing and that everything is being done that can be done is still an assumption until you test and verify that such is actually the case. Small companies are especially prone to believing that they know what’s going on and that there aren’t any improvements to be had – “we don’t have that many transactions.” If that’s true, why not prove it? Cost Recovery will help you understand how you might verify your assumptions as well as going a long way towards helping you actually do so.

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