Duplicate payments cost your company valuable time and money. Learn the 10 best ways to avoid this accounting mistake in our quick, informative guide.
Written by: Mark Saltarelli Last Updated: July 31, 2024
The accounts payable department in any company is a hive of activity, with a team of professionals working daily to keep the company’s financial wheels in motion.
But all that motion leads to negative outcomes if you don’t have a foolproof system in place.
One of the most common and costly issues AP teams face is duplicate payments. These erroneous payments happen when someone enters an original invoice incorrectly or a second invoice enters the processing system.
How can you prevent the conditions that result in duplicate payments? What steps can you take to maintain data effectively? Let’s explore ten ways to make your invoice process dupe-proof.
In this article, you’ll learn everything you need to know:
Duplicate payments occur when you erroneously pay a vendor invoice twice. At best, duplicate spend is caught and rectified. It takes Accounting's time and focus away from other activities, but at least the loss is recovered.
At worst, the double payment goes unnoticed or is caught later in a recovery audit. In these cases, the damage to company finances is permanent. It’s an expensive and pervasive problem, with the average company spending up to 2% of revenue on payment duplication.
Duplicate spend is harmful to your financial health and reporting accuracy. It can cause cash leaks, invite fraud, and cause problems securing funding. In even minor cases, duplicate payments lead to frustration and potential company cash loss.
An accounts payable ledger template makes it easy to track purchases and ensure timely payments. Download your free template for Excel or Google Sheets here.
Inadequate processes and budgetary controls are often the culprits in cases of duplicate spending. To avoid or detect potential duplicate payments, a company must have visibility into its payment process and control the payments going out the door.
To reduce or eliminate duplicate invoice payments, build these practices into your accounts payable routine:
Manual entry mistakes during the invoice entry process are often the root causes of duplicate payments. An error entering the invoice number or another piece of identifying data may cause the incorrect payment.
This human error may occur with your internal AP department or in the issuing company’s AP process. In either case, small errors can have big consequences. Using technology to electronically capture invoice data (for instance, by automating electronic invoice entry or digitizing paper invoices with a scanner) eliminates this manual task and its associated errors.
Tying all vendors back to updated W4 vendor information is one way to ensure the vendor only appears in your database once. Insisting on W4 data from each vendor enables Accounting to work within that vendor’s record.
Not only does collecting W4 data from each vendor ensure accuracy in your records, but it also confirms that the vendor is legally allowed to do business with your company and is responsible for their tax collection efforts.
When multiple stakeholders buy supplies or sign contracts, vendor databases may end up with duplicate entries of the vendor master file. These duplicate vendor entries can make it appear as though a payment has not been posted, resulting in double invoice payments.
To prevent this duplication, regularly audit and cleanse your vendor databases. Ensure that only one entry per vendor appears in your accounting roster. This may also require searching for duplicate addresses with separate business names if ownership changes due to a sale or merger of entities.
Backlogs of unpaid invoices are more likely to create problems in invoice processing. Set up new vendors in the system as soon as invoices arrive and pay those invoices in a timely manner. Not only will prompt payment strengthen your vendor relationships, but it will also cut down on confusion in your AP department if vendors send a second invoice as a reminder for payment.
An accounts payable ledger template makes it easy to track purchases and ensure timely payments. Download your free template for Excel or Google Sheets here.
