Outsourcing your audit diary: what to expect

Many financiers start by sending an outside firm the audits their own team cannot fit in: a prospect survey at short notice, a client in a distant part of the country, a busy month. Some go further and hand over the whole programme. The audit diary, meaning every client’s routine audits, planned for the year and delivered on time, becomes the firm’s job.

Done well, this frees your team to manage clients rather than chase paperwork, and gives you reports of a consistent standard. Done badly, it puts a layer between you and your clients and lets audits slip. The difference is in how the arrangement is set up.

What the firm should take on

A full audit diary arrangement usually covers:

• Planning. A schedule for each client based on your policy: how often, what kind of audit, and when it is due.
• Arranging dates with each client, discreetly, and moving them when the client cannot make it.
• Collecting the paperwork. Sending each client the list of what is needed, chasing what is missing, and having it before the visit.
• Carrying out the audit, on site, remotely or as a desktop review, to an agreed scope.
• Reviewing and reporting. Every report reviewed before release, in a consistent format.
• Telling you about problems early, not just in the report. A serious issue found on site should reach you the same day.

What should stay with you

Outsourcing the work is not outsourcing the decisions. The financier should keep:

• The audit policy: which clients are audited, how often, and to what scope. The firm can advise, but the risk appetite is yours.
• Decisions on findings: whether to change a limit, add a reserve or ask for more information. The report should make those decisions easier, not make them for you.
• The client relationship. The firm acts for you. Your clients should see it that way, and you should still hear from them directly.

Questions to ask before you agree

1. Who will carry out the audits? Ask about their experience of receivables finance specifically, and whether the same people will see the same clients over time.
2. How is a report reviewed before it reaches you, and by whom?
3. What is the turnaround from the visit to the released report, and how is it measured?
4. How do clients send their paperwork? Email attachments are hard to track and insecure. A dedicated upload link per audit is better.
5. How will you see progress? You should be able to see where every audit stands, from requested to released, without asking.
6. How is confidentiality handled, particularly for clients on confidential facilities, where debtors must not learn of your interest?
7. What happens to last year’s findings? The firm should start each audit with the previous one’s open action points.
8. How is it priced? Per audit, per day or by subscription, and what counts as extra: additional ledgers, foreign currency, travel, cancellations.

Consistency is the point

The main benefit of a single firm running the diary is consistency. Every client is audited to the same scope, in the same format, with the same tests. That makes reports comparable: between clients, so you can see which are weakest, and over time, so you can see which are getting worse. A rising dilution rate, a growing Crown creditor balance or a concentration creeping towards the limit only shows up if each audit measures it the same way.

Keeping your oversight

A firm that runs your audit diary should make you better informed, not less. In practice that means being able to see:

• The schedule: every client, when its next audit is due, and whether any is overdue.
• Each audit’s progress: contacted, date confirmed, in progress, in review, completed.
• Every report and its documents, online and as a PDF, as soon as it is released.
• Open action points across all clients.

On Business delivers its audit diary through Audits Hub, so financiers see all of this in one place and can request an extra audit there whenever one is needed.

Measuring the arrangement

Agree a few measures at the start and review them every quarter: the share of audits completed by their due date, the average time from visit to released report, how many reports needed correcting after release, and how quickly urgent issues reached you. A firm confident in its service will welcome the measures. They also give you something concrete to discuss if the arrangement drifts.

Starting well

The first year of an outsourced diary sets the pattern. Start with a review of each client’s last audit and open issues, agree the scope and schedule in writing, and hold a short review after the first few audits to adjust anything that is not working. After that, the diary should run itself, and your team’s time goes on the clients and decisions that need it.