2 min read

Using Accounts Payable Software to Stop Duplicate Payments

Featured Image

What on earth does the starry night sky have to do with AP autoamtion and improving Accounts Payable?

Well...we're glad you asked!

One of the most common forms of financial mismanagement within the Accounts Payable process, is the erroneous payment of invoices…namely, duplicate payments.  This adds unnecessary financial strain to the organization by encumbering it with additional costs, double the original amount.  Unfortunately many organizations have to deal with this hardship because they rely on manual invoice processing, instead of automating with Accounts Payable software.

When processing invoices in a manual fashion, the primary mechanism one has to audit for this is to look at the payment record by vendor.  In most cases, when you see frequent payment patterns to the same vendor, it could be a trigger that duplicate payments have occurred and should merit additional inquiry.  Obviously, this approach would not work so well for suppliers that have an amortized fee schedule that is consistent, say for a technology equipment lease, or some other fixed asset that has a structured payment amount over a set term.  However, to more deeply delve into the inquiry, one would then have to look at other items in the transaction record…PO number, Vendor Address, and even line item detail.  In the event those criteria match, then you would have a likely candidate for an invoice that has been duplicated.  Recovering the duplicate payment would then be a matter of dealing with the vendor, an additional and awkward task for AP staff to do.

However, in the advanced age we live in you can bypass most of these issues through the use of Accounts Payable software.

What’s the Accounts Payable best practice for catching duplicate payments?

Simply this…by instituting a system that we’ve advocated in a series of posts, and utilizing invoice capture, data extraction, and business intelligence you can use the data to drive this validation process.

In plain terms, you can automate a process whereby all of your invoices go through a workflow that looks for a combination of triggers to isolate duplicate payments.

The following four criteria are what we commonly use to catch duplicate payments before they happen:

  1. Vendor Name
  2. Invoice Number
  3. Date-(Due Date & Issue Date)
  4. Amount

Again, once you have these four items lining up, it’s like a quasi constellation thatilluminates a potential error.  (And you thought the Big Dipper was cool!) Instead of having to physically have an AP clerk query the ERP system for previous payments in a manual workflow and go through the inquiry process outlined above, it’s much better (and faster) to escalate exceptions automatically as they occur.  This helps the AP staff remain on task, and eliminate a lot of manual work.

In our process, we do exactly that, whereby every invoice that gets flagged for an exception (PO Mismatch, Quantity Mismatch, Vendor Mismatch, Line Item Mismatch, Forward Dated Invoice, Duplicate Payment…you name it)  This way, the AP staff only need have intervention on the exceptions, and the ‘vanilla’ invoices keep whizzing through the process for either the straight-through 2 or 3 way match or through the GL Coding & Approval process.

This is just another example of why converting invoices to data at the outset of the Payables process is fundamentally important to process transformation and improvement.  Without this step, you can only be as effective as the constraints of paper based invoice processing will allow.  And unfortunately, that’s not very good, as there is virtually no visibility to these data fields in an ERP environment until after the invoices are entered.

If you want to learn more about our approach that combines AP services and solutions to improve your Accounts Payable process, check out our best practices to AP Automation eBook below!

DASH AP ROBOT VS. APSMART | AP Automation for SYSPRO Comparison

Although we may be inclined to say that our accounts payable automation solution is the best on the market, the reality is that the needs of each...

Read More

Outlining Optimal AP Automation for Netsuite

“The beginning is the most important part of the work.” 

That's what Plato said anyways....but, we tend to agree, however that most airline...

Read More