Pay vs. Short Pay

Every auditor – whether in a carrier or enterprise organization – uncovers instances where the billed amount is higher than is should be. Then a decision must be made – to pay the full amount paid (“pay”) or to calculate the true amount due, but subtracting any discrepancies, and pay only the amount owed (“short pay”).

While paying in full does clear your accounts payable system, our typical recommendation is to short pay. Our experience shows that services providers are less motivated to reconcile a disputed amount, if already paid.

Organizational pay vs. short-pay policies are helpful to avoid inconsistent approaches across transactions and to ensure that auditors receive clear guidance on this important issue.

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