Contingent Labor
in the Financial Services Sector

Contract Compliance Technology

Australian Bank

A major human resource (HR) firm provided third party recruitment services for a large Australian bank. The HR supplier organised specialised resources for the bank, invoicing a base rate plus a finder s fee margin on top, for the first 12 months since the recruit was hired.

Profectus conducted a Contract Compliance audit to identify historical invoicing errors and ongoing live auditing of invoices prior to payment. The Contract Compliance technology also provided the banking client access to low-level data for reporting and highlighting spend optimisation opportunities.

Errors Identified

Rate Overcharges

Charge rate applied by the supplier was higher than the contracted rate.

Time-sheeting Issues

Incorrect recording in the system against timesheets.

Resource Miscategorisation

Role classifications misidentified leading to overpaying agency mark-up rate.

Mark-up Rate Charge

Agency rates are intended to drop after a set period of time but remained at a higher rate.

Outcome

Profectus conducted the Contract Compliance audit, comparing data and rate cards provided by both the client and HR firm. Cost checks on a weekly line item basis were completed, as well as checking finder’s fee margin calculation, base salary and on cost rates.

Identified by Profectus was over $2.2 million in overcharges equating to roughly 0.61% of total spend for the HR supplier.

Did you know?

The average rate of overcharging in HR/Contingent Labour spend is 0.71%, and can reach up to 5.21%.

What will you uncover?

Solution

The implementation of Profectus’ Contract Compliance technology has resulted in the adoption of standardised reason codes and rate cards across various categories of new recruits hired. An ongoing compliance framework was also implemented, which reviews historical invoices whilst validating future invoices prepayment.

Compliance Automation

With low-level data from the contract and invoice, the potential for human error was removed.

Spend Optimisation

Better decisions are made with more data available and deeper levels of visibility via a data feed into BI dashboards.

Better Bottom Line

As this document has identified, 7.1% of an annual contract spend was the result of overcharging, including five error types for the world’s largest mining company.

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