Losing the Duplicate Payments War? These Five Practices May Be to Blame!

preventing double payments

By Mary S. Schaeffer

Duplicate payments continue to be a top issue for many of our readers. While many have plugged some of the obvious holes, AP Now has identified five practices that are often overlooked in the battle. Pinpointing these issues and strengthening the internal controls around them, will better position readers to win the duplicate-payment war. Let’s take a look at the practices.

    1. Invoices paid by check request forms in case of emergency can inadvertently create a situation where the duplicate payment can slip through. Since the three-way match is often not utilized when processing check requests, the purchase order and receiver often remain open. Then when the original invoice finally shows up in accounts payable for payment it is processed through the standard payment process and paid a second time. What’s even worse is these check request payments are sometimes made without backup so tying them to a particular invoice is difficult if not impossible.
    2. The data entry practice for entering invoice numbers occasionally fosters duplicate payments. Most organizations know they should incorporate invoice coding standards and have done so. This greatly decreases the chance of a duplicate payment. However, what some don’t crack down on are the nifty ways processors sometimes have for working around the controls. Virtually all processors know that by simply adding a space or a period or another digit or letter to an invoice number they can force the invoice through their system. Successful managers make their staff understand how serious it is to take that step and a few even make it an offense to be entered in their personnel file.
    3. Payments made outside AP by employees not fully schooled in strict accounts payable routines can cause duplicates. With the move to ACH and p-cards, a decent number of organizations are allowing payments to be made by employees outside the accounts payable organization. On the face of it, there is nothing wrong with this. However, if these employees are not trained using the strict coding standards employed in accounts payable, or they do not correctly close out the purchase order and/or the receiving document, the chance for a duplicate payment looms. Additionally, although not related to payments, not properly closing these related documents could lead to inaccurate financial statements and additional work as someone has to review open receivers.
    4. Lack of a single payment mechanism to pay each vendor often results in payment being made by both p-card and invoice. While it is a theoretical best practice that each vendor be paid using only one payment vehicle, Accounts Payable Now & Tomorrow understands that in practice this is not always feasible. More than a few p-card vendors claim they cannot suppress the printing of the invoice and in theory most are marked either with a zero balance due or that the invoice has been paid by p-card. In any case where a dual payment mechanism is possible, controls need to be incorporated to ensure an item isn’t paid for twice. Third-party auditors report that much of their recoveries come from this one issue.
    5. Not sorting out duplicate copies of invoices. In the past it was relatively easy to discern a faxed copy of an invoice or a second invoice. Today, with the advances in printing and e-mail, it is no longer so simple and it’s often impossible to tell which is the original and which is the copy. Suppliers regularly send pdfs of invoices— and who can spot if it’s the first time the invoice was received or a later copy? While it’s still a good idea to refuse to pay from copies or faxes, that approach won’t provide you with the same protection it did just a few short years ago.

While it’s probably not possible to completely eliminate duplicate payments, by identifying the issues that can lead to them and taking appropriate preventative steps, you can greatly reduce their number—and with minimal effort. What’s more, and it goes without saying, you can take a machete and greatly reduce some of these problems by automating your invoice processing. See how Stampli’s Invoice Automation works.

Mary S. Schaeffer, a nationally recognized accounts payable expert, is the founder of AP Now, a company that creates business intelligence on all issues impacting the accounts payable and payment function. She is the host of the AP Now Podcast.

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