Duplicate payments have become a hassle for businesses of all scales because they are typically troublesome to detect, despite the emergence of sophisticated electronic payment solutions.
If gone undetected, duplicate payments can stack up substantial losses in terms of time and money that businesses might invest trying to iron out an overpayment.
Despite several businesses having plugged in some obvious holes of duplicate payments, below are mentioned certain practices that typically get overlooked in preventing duplicate payments.
If gone undetected, duplicate payments can result in monumental losses. Besides financial losses, it leads to time being eaten up by businesses to rectify an overpayment. A report by SAP Concur concluded that SMEs might blow up to $12,000 a month on duplicate payments.
Pinpointing these issues and strengthening the internal controls can better arm merchants to triumph over the duplicate-payment war.
The manual data entry process involves the following steps -
Manual data entry is extremely prone to errors due to human involvement and terribly slow processing time. Despite the widespread awareness of the perks of digitizing data entry processes, a Corcentric study revealed that about 44% of finance staff still receive invoices via fax.
This process is strikingly error-prone due to something as insignificant as a typing error or misplaced decimal. It can also be as severe as a disorganized invoice processing system comprising several departments and individuals coming in and analyzing data on an ad hoc basis.
Several businesses regularly review their Master Vendor File (MVF) for spelling mistakes, repeated entries, or blank information. Some experts suggest rotating this task among various employees to avoid fatigue.
If the same employees always stay in charge of analyzing the MVF, they might become normalized to the task, hurrying through the list without devoting adequate attention to identify crucial mistakes.
Accounts Payable and the supplier do not get notified of an invoice rejection or cancellation, implying that if your company pays a canceled invoice, the dues won't be marked settled.
Apart from being canceled, an invoice can get adjusted as well. Invoice adjustment alters the due amount of the invoice.
This gesture gets executed to apply a late fee to the invoice balance or offer an overall discount, and you receive another invoice to replace the previous one.
Some merchants might send the same invoice through multiple channels, and there could be times when AP follows the same path.
Typically, being the product of human error, such duplicates can also happen when a business is going through significant changes, including a merger, acquisition, or migration to e-invoicing solutions.
Typically, when a company is undergoing significant internal changes that might include software upgrades or mergers and acquisitions, data loss can occur, leading to the loss of invoice reports and due amounts.
To avoid duplicate payments, businesses contractually set up invoice and payment policies for all vendors. Companies that pay suppliers via procurement cards alleviate the risk of duplicate payments. They do so by establishing that each transaction gets paid with the card and not via manual invoice.
Accounts payable fraud affects several businesses regardless of their scale every year. This scenario happens due to several factors, such as how easy it is to commit fraud if a company uses traditional AP processes, an approach that is prone to erroneous reports and misplacement.
Some of the most common types of expense frauds include -
About 0.05% of invoices settled are payments made in error. Due to such enormous losses associated with duplicate payments, accounts payable teams must conduct a duplicate payment audit and take preventive measures to inhibit such malpractices and avert potential frauds.
Your accounts payable system must accommodate a single vendor master file record for each supplier. However, some activities can still prompt the replication of a vendor master file.
The accounts payable team can review vendor master files to eliminate duplicate vendor files and deactivate old vendors that are no longer required.
You must dispose of obsolete information, eliminate duplicate vendors, and drop a letter to all your vendors requesting them to corroborate their contact information.
Docsumo is an end-to-end document automation tool that establishes streamlined collaboration with approvers and merchants and provides users with insights into bill activities, statuses, and ownership with enhanced transparency and accountability.
Docsumo helps validate captured information against external APIs or company databases seamlessly. It extracts data regardless of the document type, be it structured, semi-structured or unstructured. You can use pre-trained APIs for common document types like invoices.
Docsumo lets you automate entity matching across documents to corroborate customer information, which reduces duplicate payments and delays. It also enables you to detect document fraud, including incorrect metadata, font changes or extra layers.
Docsumo lets you automatically identify and rule out suspicious invoices and also enables you to automate your entire accounts payable workflows to ensure that your processes are streamlined and susceptible to fewer mistakes.
You can seamlessly categorize individual data points as well as table line items with excellent precision via NLP.
If the document is shared digitally in either image or scanned pdf format, Docsumo can identify these cases in real-time -
If any of the above cases get flagged for a document, the document has most likely been tampered with. Such documents then get flagged by Docsumo and queued for review. After looking for above-mentioned conditions, Docsumo proceeds to check the invoice details:-
Some vendors might request a rush check before sending in an invoice. Complications arise when you lack backup for the rush check or information verifying that the merchant has been issued a check. When the vendor eventually sends the original invoice, a duplicate payment occurs.
Stay equipped with legitimate backup and ensure that payment information gets entered into the automation system upon issuing the check.
If a vendor sends two different source documents for a single payment, one of the source documents typically differs from the other as it might be a statement or quotation.
When such a scenario occurs, there is always a probability of duplicate payment because of the duplicated source documents. If you wish to avoid duplication, you must contractually enforce invoice and payment policies for all merchants.
A vendor might not add a purchase order number on an invoice, delaying the accounts payable team in getting the invoice into the accounting or ERP system because of the time taken to identify the correct PO number.
After not receiving payment in time, the supplier might send a duplicate invoice for the same payment, leading to the accounts payable team processing both invoices.
Therefore, you must assert that all invoices hold an appropriate PO number or the person's name who placed the order.
Duplicate payments burn through a substantial portion of a company's wealth if left uncatered. There are several causes for duplicate payments, some being the manual data entry process and human errors, while some can also be frauds and invoice tampering.
To ensure that your business steers clear of such deterrents, it is advisable to automate your AP department from reliable vendors like Docsumo. This gesture can alleviate errors such as typos, incorrect digits and maintain a robust check on fraudulent activities.
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