Smarter Payments e-Report Edition 4
5 ways to Stop Duplicate Payments
Duplicate payments occur in about 1 in 1000 payments as stated by the Institute of Internal Auditors and if your organisation makes £50 million in annual invoice payments you are likely to be paying out £50,000 or more in duplicate payments per year.
There are over 30 reasons why they happen including supplier errors & fraud, typo mistakes, mis-communication, over enthusiastic credit control or factoring companies, holes in the AP process etc. The fact is they happen and you need a multi layered strategy for true prevention. This can include a combination of the following solutions:
Solution 1 – Review Your Accounting System
Most accounting systems have a basic duplicate checker in place or at least a pop up warning message. These will only stop a number of obvious duplicates and are not designed for in-depth analysis of payments across multiple years and payment systems. Also these in-built controls can be ignored or overridden through clever forced entries such as a space, or forward slash. In most cases they can’t be improved further without considerable expense.
Solution 2 – Internal AP Audit
Look at the last 12 months and see why some of the duplicates have slipped through and undertake training or review sessions with all AP staff. Set up and enforce new invoice & payment processing policies. Simple ways to reduce duplicate payments are to review your master supplier file, carry out all statement reconciliations and have a clear policy for entering invoice numbers. These will have an effect but in most cases is time consuming and impractical. Also the information available is based on what has been found already, allowing many other duplicates to slip through the net.
Solution 3 – Build Your Own Checker
Some organisations with under-stretched IT departments will look to build their own system. In some cases this may help, however the formulas used are made up based on little experience and tend to find obvious duplicates that good AP processes should detect anyway. The hidden cost of the investigation time, time developing and maintaining this tool over several years is considerable and should only be attempted if there are considerable resources to hand.
Solution 4 – Recovery Auditor
Employ a specialist recovery auditor to review all your AP data on a “no win no fee” basis for example PRG Shultz and Connolly Consulting. They will definitely find a significant number of duplicates using their specialist techniques, however they can charge up to 40% of what they find and you will end up with a large invoice to pay. Sometimes it can also be intrusive and not enlightening as to why these mistakes are happening.
Solution 5 – Use Specialist Duplicate Payment Finder™
Buy specialist software used by accounts payable to help highlight and find duplicates on a regular basis. This can either work alongside your accounting system or actually take files directly. Make sure you “try before you buy”, by asking the software company to carry out a free audit on your AP data. This may highlight duplicates that will help pay for the software.
It is quite possible to employ solutions 1, 2, 4 and 5 as part of an integrated strategy to prevent all duplicates happening. However what is not acceptable is to leave this for 6 months especially in the current economic climate. Every month that goes by will mean your organisation will not be able to recover some duplicates as suppliers go out of business or change hands. This could amount to several thousand pounds. Doing nothing is not an option.
Go here to receive a free Duplicate Payment Healthcheck and find out how you can add value to your Organisation
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