A win-win exercise is how Eric Estrabols, the subsidiary ledgers manager at Bouygues Telecom, summarises the recovery audit conducted at his company by Runview.
Formed in 1994, the telephone and internet services provider now has 14.4 million mobile phone and 3.4 million fixed broadband customers. It generated revenue of €5.1 billion in 2017. The accounting function remains in-house.
Committed to a continuous improvement process, Bouygues Telecom first appointed Runview to check that its processes were running properly. “We do run internal checks,” Eric Estrabols explains, “but the use of an external pair of eyes makes it possible to see things we could have missed, and identify areas for improvement.”
Why did Bouygues choose Runview? “Their solution offered an opportunity to have our accounting analysed to determine whether we were on the right track in terms of recovering VAT and double payments,” the subsidiary accounts manager continues.
Two audits 5 years apart
Runview was consequently first appointed in 2012 to analyse the accounts records for previous financial years, and then for a second time in 2017 to confirm that the errors detected during the first audit had actually been corrected.
“Runview consultants’ experience with SAP meant they were able to ask us specific questions about fields and tables in the extract files,” Estrabols adds.
This data was comprehensively sifted and analysed using algorithms built by Runview, highlighting areas where irregularities are found which are then explored in greater depth by their consultants. The corresponding invoices are checked to determine potential over-payments to suppliers and overlooked input VAT.
The errors identified in this way are then submitted to Bouygues Telecom for ratification. Runview consultants then undertake recovery of double payments made to suppliers, while Bouygues Telecom claims back the input VAT.
Various irregularities identified
Thanks to the expertise of Runview’s consultants, the first audit highlighted that input VAT on some fuel was almost never claimed back, this being a complex area of tax. Bouygues Telecom was failing to recover input VAT on diesel oil although it was entitled to do so.
A number of double payments were also uncovered during the two audits: “SAP usually does not allow the same invoice to be entered twice, but if an invoice is sent twice, a small difference - such as adding a space - in the invoice number can cause an error,” Estrabols explains.
Lastly, in 2017 Runview also conducted a circularisation exercise by comparing Bouygues Telecom’s data with data from the accounting records of around a hundred suppliers. More than €600,000 was found in this way (see inset).
Eric Estrabols, subsidiary ledgers manager at Bouygues Telecom
We have learned lessons and seen areas for improvement from each Runview finding.
Reassuring findings and alterations to processes
The volumes audited were considerable. In 2017, Runview accordingly audited 1.8 million entries in Bouygues Telecom’s accounts, equating to:
- €18 billion of purchases since 2012;
- €1.3 billion of supplies within the scope of VAT since 2015.
In view of the volume of invoices processed, the audits’ findings show that Bouygues Telecom’s accounting procedures work properly, especially given that the sums recovered from the circularisation exercise did not arise from failures in the accounting processing of invoices.
“It reassured us. We saw that the checks implemented to prevent double payments are effective and that we have improved in reclaiming input VAT,” the subsidiary accounts manager reports.
An outcome that can also be attributed to the approach adopted by Bouygues Telecom after the first audit. Over and above the cash receipts from the audit, the company consequently used the audit report as a means to fine tune its accounting processes. “We have learned lessons and seen areas for improvement from each Runview finding,” Eric Estrabols confirms.
For example, the accounts team were briefed on the care needed when entering invoice reference numbers to avoid any double payments. As regards VAT, the company’s Tax Department also provided training. A new procedure was devised to deal with the recurring cases of overlooked input VAT detected by Runview and ratified by Bouygues.
“Circularisation also showed us that we need to pay more attention in our dealings with certain suppliers. Trust does not rule out checking, and we are probably going to conduct regular circularisation exercises with some of them in future,” says Estrabols.
High quality of dialogue
Bouygues Telecom therefore holds a very positive view of the audits conducted by Runview, which enabled it to recover cash and improve its processes. The quality of the dialogue surrounding the audits was also greatly appreciated. Eric Estrabols’ assessment describes how his team “supplied Runview with some very specific documents and data, and Runview gave painstaking, effective and astute responses.” Runview’s independence is another positive aspect for Bouygues Telecom.
Bouygues Telecom is also open to the possibility of working with Runview again on other assignments in future. “We have nothing to lose and everything to gain,” summarises Eric Estrabols, persuaded by Runview’s charging structure of applying a success fee to the value of the irregularities detected. “It is therefore an opportunity to improve, at no extra cost. There is no additional expenditure, as we just pay a percentage of the money we recover.” A truly win-win situation!
Bastien Meaux, Head of Marketing at Runview
Substantial sums recovered through circularisation
To detect additional sources of potential recoveries, Runview suggested a circularisation exercise with certain Bouygues Telecom suppliers. The basic principle is to reconcile the accounting records held by the two firms, with the aim of identifying potential amounts “outstanding” in supplier records of which Bouygues Telecom was unaware.
To this end, the recovery audit specialists suggested a list of 120 suppliers where this type of analysis would be most useful. The list was prepared based on a number of criteria including purchasing volume, number of invoices, type of service provided, etc. and, importantly, Runview consultants’ own experience and their knowledge of suppliers, finely-honed over the course of various assignments.
Once the list was approved by Bouygues Telecom, Runview took charge of retrieving the receivables ledgers from the suppliers to compare them with the operator’s corresponding accounts entries. After an analysis and detection of discrepancies in Bouygues Telecom’s favour, Runview checked that these amounts had not already been paid. They then asked suppliers for reimbursement when necessary.
The relationships of trust built up with its suppliers notwithstanding, this analysis resulted in Bouygues Telecom collecting a total of €643,000. A number of credit notes, totalling €267,000, were consequently recovered from a single supplier - as these credit notes had never been sent to the accounts department, they had never been deducted from invoices. Thanks to the circularisation conducted by Runview, this amount was ultimately recovered, having a positive effect on Bouygues Telecom’s net earnings and its cash flow.
About the author
Diplômé de Institut Mines-Télécom Business School (IMT-BS), Bastien a rejoint Runview en 2017 pour créer l’équipe Marketing après plusieurs postes de Responsable Marketing chez des opérateurs télécoms et éditeurs de logiciels.All the author's articles