Payment Exception Root Cause Analysis Report
Report Date: 2023-11-16
Case ID: EXC-2023-11-087
Supplier: Global Freightways Inc.
1. Executive Summary
A recurring payment exception has been identified for supplier Global Freightways Inc., caused by a systemic process gap between the Logistics and Accounts Payable departments. Logistics is approving ancillary freight charges via email, bypassing the formal Purchase Order amendment process. This creates consistent Invoice-PO mismatches, requiring significant manual intervention from AP, delaying payments, and increasing supplier friction.
2. Exception Trend Analysis



Parameter
Finding




Exception Type
Invoice-PO Amount Mismatch


Supplier
Global Freightways Inc.


Frequency
4 instances in the last 30 days


Common Cause Code
Unbudgeted Ancillary Charges (Expedited/Fuel)


Financial Impact
Average variance of ~$600 per exception; total $2,400 in review


Process Impact
Average resolution time: 3.5 business days



This pattern confirms the specialist's observation and indicates a systemic issue, not an isolated incident.
3. Root Cause Identification

Primary Root Cause: Off-System Approval Process. The Logistics department's practice of approving critical supplementary charges via email circumvents established procurement controls.
Contributing Factors:

Lack of Process Adherence: Business urgency in logistics is prioritized over financial process compliance.
Insufficient Tooling: The current PO system may be too rigid or slow for the rapid changes required by the logistics team, encouraging workarounds.
Undefined Accountability: No clear ownership is assigned for reconciling these off-system approvals back into the procurement system before the invoice arrives in AP.



4. Actionable Recommendations
Immediate (To Resolve Current Exception):

Notify Process Owner: Flag this case (EXC-2023-11-087) to the Logistics Manager (Mark Johnson) and the P2P Process Owner.
Expedite PO Amendment: Request an immediate and retroactive PO amendment for PO-99124 to match Invoice GF-INV-4591B, citing business continuity.

Short-Term (1-4 Weeks):

Mandatory Training: The P2P Process Owner should schedule a mandatory 30-minute training session for the entire Logistics team on the correct procedure for amending POs for variable freight charges.
Issue a Process Bulletin: Reinforce the correct procedure via an official internal communication, highlighting the negative downstream impact of non-compliance on supplier payments and AP workload.

Long-Term (Next Quarter):

Process Improvement Initiative: Initiate a cross-functional review with Logistics, Procurement, and AP to design a more agile "Change Order" process within the existing ERP. The goal is to create a fast-track approval path for pre-defined ancillary charges from strategic suppliers like Global Freightways Inc. This will address the root business need for speed while maintaining financial controls.