What does it mean to review internal and external processes?

Reviewing internal and external processes means going through, examining and checking how financial workflows actually function in practice, both within the organisation and in contact with external parties. The aim is to determine whether the processes are followed as intended, and whether they are themselves designed in a way that prevents errors.

Internal processes

Internal processes are ones an organisation controls entirely by itself and can change: the invoice approval order, coding, payment routines, access control and the internal control structure. A review of internal processes examines whether these routines are actually followed, and whether they are designed so that errors are found before they become costly. Common findings are manual steps with a high risk of error, an unclear division of responsibility, or control points that are missing altogether in everyday handling.

External processes

External processes involve a counterparty, for example a supplier, a customer or an authority. These include contract management, invoice flows, VAT handling towards the Swedish Tax Agency (Skatteverket), and municipal VAT compensation from the state. A review of external processes can seldom change the counterparty’s behaviour, but can determine whether the organisation’s own handling of these flows is correct: does what is invoiced match what was agreed, is VAT handled according to the applicable rules, and are discrepancies found in time.

Why the difference matters

An error in an internal process, for example an approval that is rushed through, is something the organisation can fix directly by changing a routine. An error in an external process, for example a supplier invoicing the wrong price, instead requires the discrepancy to be found, documented and then handled with the counterparty. Telling the two apart is a precondition for knowing which kind of action actually solves the problem: a new internal routine, or a dialogue with an external party based on documented discrepancies.

How Refero works with this

Reporting, proposed actions, a control plan and knowledge transfer relate specifically to the internal side. They are part of what Refero delivers after each assignment, rather than a separate service. Refero’s five services are VAT and transaction analysis, price and contract compliance, energy analysis, property analysis and tailored analysis. They mainly concern external processes, where discrepancies are identified and verified against underlying documentation before they are reported.

Read more about what you get after an assignment or about retrospective financial review in full.