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Originally published in KEEP UP TO DATE on ACCOUNTS PAYABLE
November 30, 1998. Reprinted with permission

Three ways to catch duplicate payments your system can’t

Year-end is prime time for double pays

Watch out: Half of all duplicate payments will slip through between now and February.

Why? Because with year-end coming:

Many employees are cleaning off their desks to have invoices paid in this year.
Others are holding invoices until after the first of the year due to budget problems, and
Vendors are trying to get all the money they can before the year ends.

That’s the bad news. The good news is that only 2% of duplicate payments occur because A/P processes the same piece of paper twice. The trouble usually stems from vendors and approvers.

Still, there are steps Payables can take to catch double pays, according to Jon Casher, payment recovery expert at RECAP, Inc. Here’s what you can do:

1. Scrutinize vendor file adds

Most A/P systems check vendor numbers to safeguard against duplicate payments. But checking the vendor numbers often isn’t enough, because the same vendor may actually be set-up in your system twice because:

There may be two different remittance addresses – for reasons as minor as two P.O. box numbers.
More companies are merging, and
Vendors change names. In the last five years, 15% of all vendors have changed their names.

Solution: Watch your master vendor file. Many firms think master file maintenance means only purging inactive vendors. But there’s more to it than that.

You need very specific rules on vendor adds, so you’re not setting up vendors that are already in your system. It’s important to make sure all vendors’ names are entered into your system the same way.

For example, many firms get tripped up on tax payments. Often, states, cities and towns want payments made to a certain official’s name. When the person changes, you wind up with two vendors for the same location.

To avoid that, set-up a consistent system for all municipalities: Try putting "City of …" as the vendor name, followed by the name of the official on the next line.

2. Watch invoices without numbers

A/P systems also usually check for duplicate payments by invoice number. But that doesn’t help when 40% of all invoices don’t have numbers.

That’s why it’s important to establish a consistent system for assigning invoice numbers.

Almost every company has its own system for assigning numbers – just make sure you use the same system each time.

You may want to keep a list of rules posted in A/P for reference. Note: If your list of rules is more than one page, it may not be followed.

3. Track the source of duplicates

When you do catch a duplicate payment, it’s important to follow up on it. Your best bet: Each time you spot a duplicate set it aside in a file.

At the end of the month, go through your pile and:

Sort by vendor. You may find that you have one or two problem vendors that send invoices more than once.
Sort by approver. Certain departments – or individuals – may be the cause of your trouble. Make sure you bring the situation to their attention ASAP.
Check how old the invoice is. Timely payments are rarely duplicates. The ones that sit around a while get paid twice. That’s more evidence to plead with approvers for faster paperwork turnaround.