Xelix warns AP errors leak up to USD $53 billion a year

Xelix has published research which puts annual financial leakage from accounts payable errors and fraud at as much as USD $53 billion, or GBP £39 billion, across large businesses in the UK and US.

The study analysed 481 million invoices. It found companies leak an average of 0.35% of annual spend. Xelix said this equates to USD $3.5 million for every USD $1 billion spent.

The research focused on payments and invoice processing. It identified four common sources of leakage. These were duplicate payments, invoicing errors, missed credit notes and fraud.

"Most companies know they have a financial leakage problem, but they consistently underestimate the scale. Businesses are leaking as much as 0.35% of their annual spend - that's $3.5 million for every $1 billion spent. The good news? It's entirely avoidable, and leading AP teams are already turning this challenge into an opportunity," said Paul Roiter, CEO, Xelix.

Xelix described duplicate payments as paying the same invoice more than once. It said invoicing errors include omitted discounts or the wrong taxes. It said missing credit notes often fail to get captured from supplier statements. It said fraud can come from suppliers, employees or external criminals.

The analysis also set out industry-level exposure. Xelix said manufacturing and packaging showed the highest combined losses from duplicates and missing credit notes, at 0.72% of annual spend. It attributed 0.66% to duplicate payments and 0.06% to missing credit notes. It reported invoicing errors at 0.14% of annual invoice volumes for that segment.

Healthcare followed, with total losses from duplicates and credit notes at 0.52% of annual spend. Xelix put duplicate payments at 0.38% and missing credit notes at 0.14%. It reported invoicing errors at 0.15% of annual invoice volumes.

Pharmaceuticals showed total losses from duplicates and credit notes of 0.45% of annual spend. Xelix reported duplicate payments at 0.42% and missing credit notes at 0.03%. It reported invoicing errors at 0.18% of annual invoice volumes.

Retail and consumer goods recorded total losses from duplicates and credit notes of 0.44% of annual spend. Xelix put duplicate payments at 0.27% and missing credit notes at 0.17%. It reported invoicing errors at 0.05% of annual invoice volumes.

Energy and utilities recorded total losses from duplicates and credit notes of 0.3% of annual spend. Xelix reported duplicate payments at 0.28% and missing credit notes at 0.02%. It reported invoicing errors at 0.17% of annual invoice volumes.

Operational impact

Xelix said the issue also has operational consequences inside finance teams. It said staff spend significant time handling exceptions and vendor queries. It linked payment errors with damage to supplier relationships. It also said accounts payable credibility suffers when executives see margin leakage that teams cannot fully quantify.

Why it happens

Xelix linked higher exposure to business models and transaction complexity. It said manufacturing and packaging operations run fast-moving supply chains. It said that environment increases the risk of duplicate payments. It said healthcare procurement covers both high-value capital equipment and high-volume consumables. It also said that mix increases duplicate payment risk.

For pharmaceuticals, Xelix pointed to global specialised supplier networks. It said these networks can create accidental incorrect tax treatments. For energy and utilities, it cited regulated heavy-asset projects and high-volume emergency work. It said these factors raise the likelihood of invoice errors. For retail and consumer goods, it pointed to complex discount and rebate arrangements across large supplier bases. It said this makes credit notes easier to miss.

Controls questioned

Xelix said existing approaches often fail to detect issues before money leaves a business. It cited rules-based controls, including those in enterprise resource planning systems. It said these controls miss near-duplicate invoices and do not learn from prior mistakes. It also criticised manual workflows and supplier reconciliation, which it said typically cover only a small subset of suppliers.

The research also challenged the role of recovery audits. Xelix described them as reactive and expensive. It said they can charge fees of 15% to 25% of funds recovered. It also said they often address only a fraction of potential losses.

"We're calling time on recovery audits. They don't solve financial leakage. They usually only address a small proportion of potential losses. Not to mention, they're expensive, and they don't stop the leakage from happening. It's far better to prevent leaks before the money leaves the building," said Roiter.

Automation shift

Xelix said some accounts payable teams now aim for prevention rather than post-payment recovery. It said AI-driven automation can check transactions before payment. It said this approach can cover all transactions rather than a sample. It repeated its estimate of USD $3.5 million savings per USD $1 billion of spend in organisations that prevent leakage at source.

The company said it derived the USD $53 billion estimate by applying its customer benchmarks to a broader market segment. It defined that segment as businesses in the UK and US with turnover above USD $130 million, or GBP £100 million, and more than 250,000 invoices per year.