Duplicate payments pose significant challenges for accounts payable (AP) departments and their vendors. For AP teams, they result in wasted time, financial losses, and strained supplier relationships. Understanding the origins and mechanisms of duplicate payments is essential for mitigating these issues. Here, we’ll explore how AP departments can prevent duplicate payments and enhance overall efficiency.
What are Duplicate Payments?
A duplicate payment happens when a company pays the same invoice or bill more than once. This can occur in various ways, such as issuing two checks for the same amount to the same vendor, making an electronic payment twice, or sending both a check and an electronic payment for the same invoice.
How Duplicate Payments Occur
Duplicate payments are prevalent in many companies, with AP departments often struggling to address it. There are several reasons why duplicate payments occur:
No Centralized Process for Receiving Invoices
Vendors might resend invoices as payment reminders, in different formats like mail or email. This can lead to confusion and potential duplicate payments, especially in hybrid work environments where invoices might be sent to one location while being processed digitally elsewhere.
Miscommunication & Lack of Visibility into the AP Process
With the rise of hybrid and remote work models, clear and centralized systems for managing payments are crucial. Without these, it becomes challenging for teams to ensure all bills are paid correctly and on time, avoiding duplicates.
Lack of Digital Payments
Many companies still rely heavily on checks, which can get lost, delayed, or sent to the wrong address. Reissuing checks wastes time and resources and increases the risk of duplicate payments if proper communication is lacking.
Payment Scams
AP teams must be vigilant against fake invoices. Fraudsters often use existing vendor invoice data to create scams and target AP teams via regular mail and email. If AP teams mistakenly pay these fraudulent invoices, they will still owe the vendor, resulting in duplicate payments.
Duplicate File Entries in Your ERP System
Manual processes make it easy for duplicate vendor entries to occur. These can also arise during mergers, acquisitions, or organizational changes. If a vendor file exists twice in the ERP system, AP teams may unknowingly make duplicate payments.
Problems Caused by Duplicate Payments
- Wasted Time and Money: Duplicate payments waste both time and money, as AP teams must issue two payments and spend additional time correcting the error. Vendors’ accounts receivable teams also expend effort returning excess funds.
- Strained Vendor Relationships: Duplicate payments create work for vendors, potentially straining relationships. Given the importance of strong vendor relationships, minimizing payment errors is essential.
- Missed Discounts and Late Fees: Fraudulent schemes not only cause duplicate payments, but can also result in missed discounts and late fees, adding further expenses for the AP department.
How to Avoid Duplicate Payments
1. Streamline How You Receive Invoices
Centralize invoice receipt by creating a dedicated email address or inbox for all invoices. Scanning paper invoices and entering them into the same system and digital ones can help avoid duplicates.
2. Use Invoice Capture to Standardize Invoice Data
Invoice capture technology can automatically extract key information from invoices, ensuring accurate and consistent data entry into your AP system.
3. Check Invoices for Fraud
Regularly checking for invoice fraud by looking for anomalies such as unusual invoice numbers or amounts. Ensuring invoices are from legitimate vendors and directing payments to the correct bank accounts is crucial.
4. Improve Visibility in Your Process
Using a centralized system for managing invoice payments enhances visibility, making it easier to track and prevent duplicate payments. Assign unique invoice numbers, update payment statuses, and set alerts for overdue or duplicate invoices.
5. Use Electronic Payment Methods (Instead of Checks)
Switching to electronic payments like ACH or virtual cards can reduce the likelihood of duplicate payments. These methods process faster, offer better tracking, and provide more security than paper checks.
6. Avoid Human Error
Minimize human error by improving the invoice approval process, standardizing procedures, and removing duplicate vendor entries from the ERP system. Regularly train employees on AP processes and new technologies to prevent mistakes.
7. Embrace a Paperless Process
Going paperless makes tracking and managing AP processes easier. Digital payments and a centralized documentation system reduce the risk of losing invoices.
How Settle Can Help with AP Automation Solutions
Automatically Detect and Prevent Duplicate Payments
Settle’s AP automation flags potential duplicate invoices by comparing new transactions against past ones, ensuring duplicate payments are caught before processing.
Improve Efficiency and Accuracy
By automating invoice capture and processing, Settle reduces manual errors and speeds up payment cycles, allowing your AP team to focus on strategic tasks.
Enhance Visibility and Control
Settle provides a centralized system for tracking invoice status and payments, improving oversight and simplifying account reconciliation to prevent duplicate payments.
Strengthen Vendor Relationships
Accurate and timely payments foster trust with suppliers, and Settle’s automation quickly resolves issues, maintaining positive vendor relationships.
Achieve Back-Office Digitization Goals
Settle helps reduce manual processes, improve accuracy, and enhance efficiency, providing the flexibility needed in today’s competitive relationships.
Transform your AP processes and prevent costly duplicate payments. Request a demo today and see how Settle can drive your organization’s financial efficiency and success.
