Supplier Contract Compliance & Control Reviews

When an organisation needs to minimise supplier payments lost through ineffective systems or insufficient oversight of contract deliverables, it calls on the services of a provider experienced in supplier contract compliance. The review will then, typically, examine the diverse ways that business partners such as suppliers, licensees and distributors can – unintentionally or intentionally – fail to deliver on contractual commitments and make errors in charging for services.

The review may also extend into evaluation of the most complex elements in supplier framework agreements, such as outsourcing arrangements, most-favoured customer clauses, cost-plus or time and materials arrangements, rate cards, process improvement guarantees, conditional incentives, expense pass-through and conditional pricing.

The outcome from this appraisal is likely to be identification of many areas where the organisation can recover overpayments, improve future contract negotiations, and leverage multiple supplier relationships to obtain better value.

Depending on the expertise of the compliance service provider, the review outcomes may also encompass recommendations on establishing compliance programmes to monitor supplier’s fulfilment of contract terms and to avoid future errors.

Why perform supplier contract compliance & control reviews?

Supplier contract compliance & control reviews are performed under the “right to audit” clause to help ensure that framework agreements are being adhered to.

The main benefits include:

  • Cash recoveries – ensuring suppliers have not overcharged per the contracted pricing structure
  • Ensuring due credits and discounts are applied
  • Highlighting erroneous overpayments to suppliers
  • Detecting and preventing fraud
  • Process improvements
  • Risk identification & mitigation
  • Verifying accuracy of data reported by suppliers
  • Establishing more productive supplier relationships

If overpayments are detected, the review identifies the root cause, quantifies the overcharge and establishes a basis for negotiating recovery from the supplier.  The level of recoveries depends upon complexity of the framework agreements, materiality of spend and effectiveness of both the supplier and client control environment.

Why Fulcrium?

Fulcrium is uniquely positioned to help clients with Supplier Contract Compliance & Control Reviews:

  • We have built an enviable track record of auditing over $60bn of Supplier Contract Compliance & Control spend over 15 years
  • We use our own proprietary software tools that have been developed over many years to fast track the Findings process
  • We have our own proprietary database of benchmark data accumulated over 15 years
  • We blend our Benchmark Data, Software Tools, Process Consulting and Strategic Framework formulation skills which takes these reviews to a whole new level in terms of quantum of recoveries as well as identification of supplier compliance violations

Fulcrium has developed proprietary tools to vastly improve recovery identification and fast-track the Supplier Contract Compliance & Control Review process. 

By undertaking forensic reviews covering all these areas, Fulcrium’s Compliance, Control and Risk Management team has helped clients recover millions of dollars in erroneous supplier payments.

However, our expertise goes far beyond even the most complex review processes described above.

It is no exaggeration to say our Contract Compliance, Control and Risk Management Services are unique and deliver significant value-add.

Our expertise in Procurement and Supply Chain Benchmarking enables us to provide an end-to-end service from the Procurement Function (framework agreements, call-offs) through to the Finance Function (purchase order, invoice, payments) within client organisations.

We understand how finance and procurement must leverage the entire intra-organisational processes and supply chain management frameworks to reduce risk, enhance relationships and deliver bottom line savings, and the part that effective risk management must play in that process.

We operate at the strategic and operational end of the process – bringing to bear our deep understanding of risk management and the procurement-to-finance workflows. And we operate at the detail level, rigorously reviewing both client and supplier systems to gain rapid insights into the internal processes governing contract compliance.

We operate in multiple geographies, evaluating a mix of global and local supplier contracts – including those drawn up in less developed geographies.

Although we have extensive experience in the oil and gas sector, we work in multiple business sectors, enabling us to bring best-practice from one sector and organisation into another.

Our proven, proprietary methodologies, benchmarking frameworks and control review processes ensure that future supplier compliance and control errors are eliminated.

Understanding of, and sensitivity to, cultural, legal and organisational diversity is at the heart of all our engagements – as is confidentiality.

Our approach is always non-adversarial, ensuring that all parties are able to co-operate in a spirit of mutual trust and key relationships remain intact or even enhanced.

If you want to have the optimum levels of assurance on supplier contract compliance and control then contact us today.

Why Fulcrium?

Fulcrium is uniquely positioned to help clients with Supplier Contract Compliance & Control Reviews:

  • We have built an enviable track record of auditing over $60bn of Supplier Contract Compliance & Control spend over 15 years
  • We use our own proprietary software tools that have been developed over many years to fast track the Findings process
  • We have our own proprietary database of benchmark data accumulated over 15 years
  • We blend our Benchmark Data, Software Tools, Process Consulting and Strategic Framework formulation skills which takes these reviews to a whole new level in terms of quantum of recoveries as well as identification of supplier compliance violations

Case Study

Fulcrium was commissioned by a Supermajor oil company to undertake several comprehensive Contract Compliance, Control and Risk reviews on behalf of its Finance division. With a global scope, the project entailed traditional review, and forensic analysis within the client and suppliers’ systems as well as benchmarking of framework agreements and control processes.

Within the first weeks of commencing the review, Fulcrium identified a multi-million dollar erroneous payment to a single supplier, and numerous additional violations from multiple suppliers.

What made this project of exceptional value to the client was the substantial cash recovery and also how the supplier relationship could be enhanced by revising the control framework. It was Fulcrium’s unique abilities to link forensic reviews with strategic Procurement and Supply Chain Benchmarking, and Risk Management that led to the findings.

Such findings would not have been possible through a traditional straightforward contract compliance, control and auditing service.