Duplicate payments are a constant concern for accounts payable departments and their vendors. Not only do they lead to wasted time and money, but they also put a strain on supplier relationships.
It might not occur every day but duplicate payments can quickly add up, costing your business thousands of dollars. Here’s an essential guide to understanding and preventing duplicated payments—including 5 straightforward tips for reducing the risk.
What is Duplicate Payment?
A duplicate payment is when money is sent to the same supplier twice, either through a single payment or multiple payments. This can occur by accident if an organization sends a second check without noticing that they’ve already paid, or through more complex mistakes in accounts payable processing, such as double counting invoices.
Most duplicate payments are caused by a lack of communication between accounts payable and finance departments, or simply human error—but they can also occur intentionally.
Examples of Duplicate Payment
Here are some common examples of duplicate payments:
- An accounts payable department sends a check to the same vendor twice for the same invoice.
- A single invoice is processed and paid twice by mistake.
- A vendor sends two invoices for the same goods or services, resulting in double payments.
- Two separate vendors send similar invoices for the same goods or services, resulting in double payments.
Is Duplicate Payment Consider Fraud?
Duplicate payments are not always considered fraud, depending on the circumstances. For example, if a duplicate payment is caused by a simple mistake or human error, it may be viewed as an innocent oversight.
However, if someone intentionally creates duplicate payments in order to gain additional funds, this is typically considered fraud and could result in criminal prosecution.
How Does a Duplicate Payment Happen?
It’s easy to pass the buck and attribute duplicate payments to human error, however the true causes generally derive from a lack of internal controls.
Errors made during invoice data entry aren’t caught in time, enabling each person involved in payment processing to trust that what they are working with is accurate without verifying it first.
Other examples of duplicate payments can include: incorrect coding and manual processes, a lack of communication between departments, and improper document retention.
To evade issues like these, cleaning up your data, instituting fixed procedures for payment processes and using automated payments systems can make all the difference.
What Are The Risks of Duplicate Payment?
The risks of duplicate payments range from low-level errors to significant financial losses due to fraudulent activities.
Some common risks associated with duplicate payments include:
Lost time and resources spent on manual data entry—It takes more time and effort to enter the same information multiple times, both for your accounts payable team and any vendors who have to process more than one payment.
Negative impacts on supplier relationships—Duplicate payments can cause tension and confusion between suppliers and your business, leading to damaged trust and strained relationships.
Financial losses from double payments—If the same invoice is paid twice, you will lose out on that money unless it’s recovered quickly.
How To Detect Duplicate Payments?
There are several methods for detecting duplicate payments, however the best way to do this is through data analytics. An automated system can quickly and accurately identify any potential errors in your accounts payable process, including duplicate payments.
Other methods for detecting duplicate payments include manual checks on invoices and thorough data entry procedures. Additionally, certain software programs can also help you identify any potential duplicate payments.
To maximize efficiency, Decision Engines InvoiceIQ solution is the optimal choice. This end-to-end intelligent AP automation digitizes multi-layout worldwide paper invoices with over 85% accuracy and continues to learn new vendor formats on its own. Plus, it seamlessly coordinates data between vendors, AP systems, and your team for a smooth process from start to finish.
5 Tips to Prevent Duplicate Payments
- Make sure all vendors are properly identified: It’s important to have a system in place that ensures all vendors are accurately identified in the accounts payable system. This will help to prevent payments being sent to the wrong person or organization.
- Double-check invoices: Invoice errors can be another common source of duplicate payments, so make sure all invoices are checked for accuracy before they’re approved.
- Automate payment processing: Implement an accounts payable automation system to streamline the payment process and reduce manual errors.
- Implement a duplicate payment policy: Make sure that all staff are aware of your organization’s duplicate payment policy, so they know when to escalate any potential issues.
- Monitor for fraudulent activity: Regularly monitor accounts payable data for signs of fraudulent activity, such as duplicate payments or false invoices.
Duplicate payments are a common problem in accounts payable processes, but they can be avoided with the right precautions and controls.
Automated systems, such as Decision Engines’ InvoiceIQ solution, can greatly reduce the risk of duplicate payments; manual checks can provide an extra layer of security. Additionally, it is important to ensure that all vendors are properly identified, double-check invoices, and monitor accounts payable data for fraudulent activity in order to mitigate the risks associated with duplicate payments.
By taking these steps, you’ll be able to ensure that your accounts payable processes are streamlined and efficient, while keeping costs down and relationships with vendors intact.