Ask accounts payable managers about duplicate payments and most will say that they don’t exist.
“Our ERP system detects if we try to enter an invoice twice.”
After further discussion, it’s not unusual to hear them admit to receiving credits from suppliers for overpayments.
Duplicate payments do happen, but to what degree?
Based on our research, it averages out to be approximately 0.5% of payments. This seems small enough but if your payments are $100 million, this would equate to approximately $500,000 in over payments – essentially lost money, unless it is somehow returned or reclaimed.
To put this into perspective, a profitable company will turn over a profit of 10% after costs. If the company’s turnover is $100 million, its profit would be $10 million. In this case, $500,000 equates to 5% of the company’s profit. That is a very significant number in anyone’s books. To recoup this loss the company would have to increase its revenue by $5 million. Not an easy task.
So how do duplicate payments occur?
Most ERP solutions use a very basic formula to detect duplicate invoices: Supplier + invoice number + amount = match.
There are a number of common accounts payable errors that will result in duplicate invoices passing through an ERP system undetected:
- The invoice number is keyed differently to the first time (i.e. with or without spaces, with or without special characters or leading zeros).
- The invoice is entered against a different account. This is particularly common if an account for the same supplier is set up twice.
- The operator intentionally changes the invoice number as some ERP systems will not process the same invoice if it has been entered and cancelled previously.
There are four types of duplicate payments:
- Duplicate invoices detected when being keyed in to the ERP system
- Duplicate invoices detected prior to payment
- Duplicate payments credited back by the supplier
- Duplicate payments you never detect
It is the duplicate payments that go undetected that make up the 5% loss.
Complete automated accounts payable solutions – CAAPS – offer advanced duplicate detection, which detects for invoice duplication prior to payment. It is this advanced duplication feature that has identified millions of dollars in over payments.
Concerned about your existing undetected overpayments? We can help.
Acumen Data offers a complimentary review in which we process your payments for the past twelve months to help identify overpayments that have not been credited back.
Contact Us to find out more and request your complimentary duplicate payments review.