Duplicate payments are one of several types of overpayment errors that transpire within the accounts payable management function. The Institute of Internal Auditors have highlighted that duplicate payments make up between 0.5% and 0.1% of annual supplier invoice payments which means one in a 1000 payments could be a duplicate. If your organisation makes £50 million in annual invoice payments you are likely paying out £50,000 or more in duplicate payments per year..
How Do They Happen?
A normal invoice entry includes an invoice number, date, amount, vendor number and many other fields. If any of these fields are typed mistakenly or inconsistently, the software’s inherent check for duplicate payment will not be effective. Add to this fact there might not be a defined invoice numbering system it’s reasonable to witness how overpayments can slip through the net.
Internal Audit
This problem issue can be resolved by carrying out the subsequent process :
1.) Obtain a file of the full payment history
The key data fields which are required are Supplier Reference, Invoice Number, Amount and Invoice Date. Where appropriate, Purchase Order number can also be valuable.
-For convenience, and to produce a smaller number of suspected duplicates, it is often useful to divide out suppliers such as landlords where the payments are always constantly the same identical amount.
-The data should include credit items. This will reduce the frustration of finding large duplicate payments which have already been collected with recovery audit software or where errors have been immediately reversed at the time of entry.
2.) Query the data using sophisticated duplicate-finding techniques or system.
-This will require the use of a system that can identify classify the items most likely to be duplicates.
-Query results should of course be listed in descending order of monetary amount and prospect of being a duplicate.
3.) track suspected items back to their supporting documents using recovery audit software.
4.) Contact overpaid vendors, and demend repayment or a credit note.
-This step may require some tact, but vendors are likely to be co-operative with their existing customers. Problems are expected when contacting former suppliers.
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