New Report: Financial Leakage Costs Businesses $53B a Year

Businesses may be losing more through accounts payable than they realize – and most of it never shows up as a line item.

A new report from Xelix estimates that companies across the U.S. and U.K. are losing up to $53 billion annually to preventable AP errors, which the firm calls “financial leakage.”

The issue isn’t isolated or rare. On average, organizations lose about 0.35% of annual spend through duplicate payments, invoice errors, missed credits and fraud. That equates to roughly $3.5 million for every $1 billion processed through AP.

The exposure builds over time, not from a single failure. Errors pass through standard controls and accumulate into measurable margin loss.

Financial Leakage: Where the Money Slips

The report identifies four primary financial leakage categories:

• Duplicate payments, where the same invoice is paid more than once
• Invoice errors, including missed discounts or incorrect tax treatment
• Missing credit notes that never get applied, and
• Fraud, from internal or external actors.

Each category reflects a control gap inside the procure-to-pay cycle. Many of these issues originate upstream in procurement, vendor data or invoice intake, then move through AP undetected.

The problem is scale. Xelix analyzed 481 million invoices and found these weren’t edge cases – they were recurring patterns embedded in day-to-day processing.

Industry exposure varies, but the underlying factors are consistent: transaction volume, supplier complexity and weak reconciliation practices. Manufacturing and healthcare organizations show the highest financial leakage, driven by complex supply chains and high invoice throughput.

Why Controls Fall Short

Traditional controls aren’t built to consistently catch these issues.

Rules-based enterprise resource planning (ERP) checks often miss near-duplicate invoices or subtle pricing discrepancies. Manual reconciliation processes tend to cover only a fraction of suppliers. Recovery audits, while useful, are backward-looking and typically limited in scope.

That leaves a gap between what systems are designed to detect and what actually flows through payment runs.

“We’re calling time on recovery audits,” said Paul Roiter, CEO at Xelix. “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.”

The impact shows up quickly in operations. AP teams spend significant time resolving exceptions, handling vendor inquiries and correcting errors after payment. That creates added pressure on cash forecasting, accrual accuracy and supplier relationships.

It also creates a credibility issue. When financial leakage shows up after the fact, finance leaders are left explaining margin loss that wasn’t identified in real time.

From Cost Center to Control Point

The report frames AP differently – not as a transactional function but as a control point for protecting cash and controlling spend.

The opportunity is straightforward. If financial leakage averages 0.35% of spend, tighter controls can recover lost payments, missed credits and pricing errors that have already moved through AP.

Some organizations are already addressing this with continuous invoice monitoring, supplier statement reconciliation and post-payment audit controls that identify and correct errors across large invoice volumes.

The real risk is what never shows up in reporting. Treating AP as a control point means tracking financial leakage alongside DPO and working capital, and assigning clear ownership for reducing it over time.