Duplicate Payments

When a single vendor invoice is paid multiple times, a duplicate payment occurs. A duplicate payment is often the result of one of two things: a processing error or fraud. In a perfect world, a vendor would notify you and refund your overpayment. 

The reality, however, is that most duplicate payments go undetected. If the duplicate payment arose due to fraud, the vendor may attempt to deceive one of your employees or even worse, not even exist. 

While duplicate payments pop up in all industries, they are a particular concern for manufacturing, distributors, or logistics companies who have a long list of expenses, including freight costs. 

To protect your organization from duplicate payments and the time, money, and headaches they often cost, it’s important to be proactive. Here are some tips to help you do so.

Design an Invoice Policy for Vendors

Take the time to design an invoice policy that dictates how your vendors submit invoices. Whether it’s mail, email, or fax, all invoices should be sent to one central location. For example, you may decide that all vendors submit invoices via email to accounting@yourcompanyname.com. This will eliminate any confusion and significantly reduce the risk for duplicate payments. 

Ask Vendors to Provide PO Numbers

Here’s a common scenario that often leads to duplicate payments: A vendor forgets to include a Purchase Order (PO) number on their invoice. The organization delays imputing the invoice into the ERP or accounting system because it takes too long for them to find the correct PO number. Then, the vendor sends in another invoice with the PO number this time because they still haven’t received their payment. The account payable team processes both invoices.

To prevent this scenario, ask your vendors to include an appropriate PO number on all invoices. You can send out an email to them and clearly outline this requirement. State that you’ll return any invoices without a PO number.

Allow a Human to Approve All Invoices

No matter how advanced technology becomes, you should never process an invoice until it’s been reviewed by a human eye. Dedicate an employee or group of employees to take care of this. Also, ensure that any particularly large invoices go through multiple stages of human approval before their payments are processed. 

Only Pay Original Invoices

Ideally, you’d only pay original invoices. However, if you need to make copies of invoices for any reason, make sure that you only pay the original ones. Get in the habit of marking each original invoice as “PAID” to avoid any issues. Also, never process any payments based on an email or phone call from a vendor. Only use the official invoice sent to you.

By following these tips, you can save your organization from losses and improve its cash flow. However, we also recognize how small or medium sized businesses may not have the time or resources to implement these best practices. Therefore, our firm, Clark Raymond is here to help.

Partnering with Clark Raymond

Clark Raymond uses IDEA data analysis software, a data analysis tool that analyzes large volumes of data to help solve accounting and financial problems.  If your organization receives many vendor invoices throughout the year, Clark Raymond can use IDEA data analysis software to help you detect duplicate payments. Clark Raymond can conduct testing and pinpoint instances where a combination of the same vendor, invoice date, invoice number, and payment amount were used. 

Due to the fact that many accounting softwares prevent duplicate field entry and fields can be changed by humans, IDEA data analysis software used by Clark Raymond can perform “fuzzy matching,” where it identifies close matches, rather than exact matches. 

For example, these invoices may still indicate that a duplicate payment occurred even though there are minor differences between them.

  • Vendor #301 Amount $352 Invoice #: 6467 Invoice Date: 2/25/20
  • Vendor #301 $325 Invoice #:6467$ Invoice Date: 2/25/20

Contact David Motes for more information about how Clark Raymond can help recover cash from duplicate payments using specialized software.