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During a recent Peeriosity PeercastTM, a Peeriosity member company with over $15 billion USD in annual revenue shared their approach to managing duplicate payments. Their Accounts Payable organization processes https://quick-bookkeeping.net/ 2 million invoices a year with over $8 billion USD in payments to vendors. In fact, the Association of Certified Fraud Examiners estimates that 5% of all revenue is lost to occupational fraud every year.
What is the risk of duplicate payments?
Duplicate invoice payments occur far more often than most realize, resulting in cash leakage. It's estimated that companies make duplicate payments at the rate of 0.1% up to 0.5%.
Procurement & AP automation software like Order.co creates maximum visibility in your invoice processing practice. Order.co centralizes and automates processing, making errors and fraud less likely. AP automation software not only makes invoice processing more streamlined, but it also operates 24 hours a day — much more quickly than an AP clerk entering payments manually.
When Are Companies Most Likely to Make Duplicate Payments?
For example, if you entered „7” days for the date tolerance, then all invoices with a date different of 7 or less would be considered similar. We generally set the date tolerance to 21 days to catch duplicate payments made 3 weeks apart; this often eliminates catching legitimate rent payments. The thought of making duplicate payments is another stressor atop the AP department’s already high-pressure job. And no matter how careful employees are, they’ll make mistakes from time to time.
Documents with the same amountEvery row contains two different documents with the corresponding posting lines having the same amount . The reason behind this is that the same document is being listed once on the left and once on the right of the document pair. An invoice is recorded twice, once through the automatic process of invoice receipt by scanning the invoice and once as a paper invoice. Accounts payable are recorded twice because they are circulating several times in the company. This algorithm identifies invoices that are way above average for a particular vendor.
Cause of Duplicate Payments
Processing invoices is tedious work, yet it requires tremendous focus and attention to detail. And when AP teams miss payments, they not only rack up expensive late fees, but they also disturb the company’s cash flow. Unfortunately, missed payments aren’t the only thing that can go awry. Another common problem AP departments face is duplicate payments. Some organizations use a specialized audit company to target duplicate payments. These companies work on a contingency basis, so there are no up-front, out-of-pocket costs.
Volopay allows you to customize your workflow for invoice processing or any business payment for that matter. If they initiate and send the same invoice twice, either through email or by mail, it can trigger duplicate payment too. If you were interested in the gems from AP Now’s Mary Schaeffer sprinkled throughout this article, you might have your curiosity piqued to learn more by watching our recent webinar on duplicate payments. Watch today and gain valuable insight into the scourge of duplicate payments while discovering concrete steps you can take to eliminate this pesky drain on staffing, resources, and finances forever. According to Mary Schaeffer “Automation is great for weeding out duplicates and it does it fast and cheap and easier than people.
Duplicate Payments: Best Practices to Prevent Them
It can be non-viable to pause at every invoice, do manual verification and hold it to pay later. But this can help prevent faulty and fraudulent payments when invoices come with incorrect details. Develop a step-by-step process to guide your accounts payable department to work on invoice processing until the last step. Educating this way can make them aware of where to stop, where to proceed, and where to intimate the vendor.
For the last thirty years, he has primarily audited governments, nonprofits, and small businesses. He is the author of The Little Book of Local Government Fraud Prevention and Preparation of Financial Accounts Payable Duplicate Payment Audits Statements & Compilation Engagements. Charles is the quality control partner for McNair, McLemore, Middlebrooks & Co. where he provides daily audit and accounting assistance to over 65 CPAs.
