Duplicate Payments

If your organization spends $50 million annually then it is likely you are losing $50,000 or more in duplicate payments each year. If you spend more, the problem is very probably worse. Duplicate payments are one of several types of overpayment errors that occur within the Accounts Payable process and they happen for a number of reasons. The Institute of Internal Auditors has found that duplicate payments make up between 0.5% and 0.1% of annual invoice payments, meaning that one in 1000 payments could be a duplicate. Examine three or more years of historical Accounts Payable data and the immediate savings for an organization can run into six figures.

In many cases duplicate payments and invoicing errors are underestimated because they are invisible and it is assumed that existing processes and systems catch them all. Only when a vendor returns the payment does the issue get acknowledged, but of course this doesn’t often happen. In the current economic climate every Accounts Payable team needs to add value by double-checking its systems and looking under every stone for cost reductions. Checking for duplicate payments offers a realistic and immediate way of achieving this.

How Do Duplicate Payments Occur?

Accounting systems normally have basic controls in place to flag possible duplicate payments. However because there are well over 30 different reasons why they occur, many duplicates and errors go undetected. The Institute of Management and Administration acknowledges that "completely eliminating duplicate payments may be an impossible dream".

A typical invoice entry requires over 12 different fields of data, including invoice number, date, amount, vendor number, tax, purchase order number and so on. If any of these fields are entered inaccurately or inconsistently by the vendor or the in-house data entry team, the system’s inherent check for duplicate payment will not be effective, even if there is a purchase order in place.

Cost of Doing Nothing

Every month your organization leaves this issue, it risks losing the chance to recover an invoice because a vendor may have gone out of business. What is more, every month the cost of recovering these payments increases. As a result, potentially hundreds if not thousands of dollars are being needlessly lost by organizations each month. This is a growing issue for all Accounts Payable teams so, with increasing pressure to make payments in shorter time periods with fewer resources to check them, it is important to take proactive steps and introduce additional sophisticated controls.

FISCAL Technologies is the only organization worldwide dedicated solely to producing best-in-class Accounts Payable audit software. Over the years we have analyzed client data from all the major financial systems and in 100% of cases we have discovered accidental duplicate payments and errors of which our clients were unaware.