Big businesses in the UK and US are losing as much as $53 billion (£39 billion) each year to “financial leakage”. This represents a massive opportunity to reclaim lost profits. This is the key finding from Xelix – a leading agentic AI software for Finance teams – new report ‘Financial leakage: The $53bn opportunity for Accounts Payable teams’.
These losses stem from duplicate invoices, invoicing errors, missed credit notes and fraud. While many companies have accepted them as an unavoidable cost of doing business, they are entirely preventable.
Paul Roiter, CEO at Xelix, said: “Most companies know they have a financial leakage problem, but they consistently underestimate the scale. Businesses are leaking as much as 0.35% of their annual spend – that’s $3.5 million for every $1 billion spent. The good news? It’s entirely avoidable, and leading AP teams are already turning this challenge into an opportunity.”
According to Xelix’s report, common forms of financial leakage include:
- Duplicate payments: Paying the same invoice more than once
- Invoicing errors: Omitting discounts or applying the wrong taxes
- Missing credit notes: Often not captured from supplier statements
- Outright fraud: Deliberate deception by suppliers, employees or criminals
Beyond direct financial losses, leakage undermines team morale as AP staff spend days firefighting exceptions and fielding calls from frustrated vendors. Payment errors damage supplier relationships, while AP’s credibility with leadership erodes as executives see margin leakage they can’t fully quantify.
The most at-risk industries are listed below.
| Total losses from duplicates and credit notes (percentage of annual spend)
|
Duplicate payments (percentage of annual spend)
|
Missing credit notes (percentage of annual spend)
|
Invoicing errors (percentage of annual invoice volumes) | |
| Manufacturing and packaging
|
0.72% | 0.66% | 0.06% | 0.14% |
| Healthcare | 0.52% | 0.38% | 0.14% | 0.15% |
| Pharmaceuticals | 0.45% | 0.42% | 0.03% | 0.18% |
| Retail and consumer goods | 0.44% | 0.27% | 0.17% | 0.05% |
| Energy and utilities | 0.3% | 0.28% | 0.02% | 0.17% |
Financial leakage affects some industries more than others due to their business models.
- Manufacturing and packaging: Elaborate, fast-moving supply chains create more opportunities for duplicate payments
- Healthcare and hospital operators: Complex procurement needs—from high-value capital equipment to high-volume consumables—increase duplicate payment risk
- Pharmaceuticals: Global specialised supplier networks give way to accidental incorrect tax treatments
- Energy and utilities: Complex arrangements from regulated heavy-asset projects to high-volume emergencies drive invoice errors
- Retailers and consumer goods: Multiple discount and rebate arrangements with hundreds of suppliers mean credit notes easily go missing
The report highlights why existing AP controls are failing to prevent leakage:
- Rules-based controls: Including enterprise resource planning (ERP) systems—routinely miss near-duplicates and cannot learn from past mistakes
- Recovery audits: An expensive, reactive approach charging fees of 15-25% of funds recovered, often addressing only a fraction of potential losses
- Manual workflows and supplier reconciliation: Time-consuming processes that typically cover just 10-15% of suppliers, missing many errors and unused credit notes
- Makeshift processes: Emails and spreadsheets that are vulnerable to human error
Paul Roiter continues: “We’re calling time on recovery audits. 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 report shows that forward-looking AP organisations are embracing a fundamental shift: from reactive recovery to proactive prevention. AI-powered automation prevents errors before payment, enabling teams to audit 100% of transactions and save $3.5 million per $1 billion in spend.
