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How Much Is Your Business Losing To Duplicate Payments? How An Invoice Management Solution Can Help
According to research, almost a quarter (23 percent) of companies pay duplicate invoices. Eric Pickles, Secretary of State for Communities and Local Government, is so concerned at the amount of money lost by local councils through paying suppliers twice that at the end of last year, 2012, he made Tackle duplicate payments number 4 of 50 bullet points in a list of ways for local government to save.
The information services company Experian estimates that councils waste up to £147 million a year through paying bills more than once. They cite examples including that of the London Borough of Islington which recently undertook an internal audit of payments to their thirty main suppliers to discover that ten had been paid twice and two further suppliers paid three times - these overpayments alone totalling £55,000 – and that Leeds City Council had managed to recover £500,000 in overpayments.
So why do duplicate payments happen?
No business wants to pay a bill twice, but it’s a fact of life that duplicate payments are a common occurrence in many organisations – and the larger the organisation, the more ...
... prone it seems they are to making duplicate payments.
Partly the fault lies with senior managers who accept that a degree of error is unavoidable, but a host of other reasons have been identified as contributing to duplicate payment, including:
• Duplicate supplier records – it is not uncommon in systems for one supplier to have a number of records, to be referred to variously as with or without the Ltd or Plc, in full or abbreviated format, etc.;
• No clear policy on dealing with non-Purchase Order invoices;
• Re-issued invoices not picked up on;
• Fraud – whereas the majority of duplicate payments can probably be put down to ‘mistake’, there are undoubtedly attempts by unscrupulous suppliers to defraud through the issue of duplicate invoices, often through varying the name of their company to avoid detection.
And the result?
• The business loses money;
• There is a damaging effect on cash-flow;
• And Accounts Payable (AP) staff are involved in extra work to reclaim identified overpayments.
An Invoice Management Solution – and how it can help avoid duplicate payments
An Invoice Management Solution (IMS) automates invoice processing through from data capture, and has key features which can aid detection of duplicate invoices:
• In-built duplicate invoice validation processing using one or a combination of key data values (including supplier number, invoice date, invoice amounts etc.), rejected invoices routed for AP resolution;
• Purchase Order (PO) invoices are matched against the PO - once matched they can’t be ‘matched’ again, and duplicates are rejected;
• In-built online coding and authorisation processing for non-PO invoices conforming to clearly defined, enforced business processes;
• Authorised users outside the AP department can access documents to settle queries, with a supplier portal an option to enable suppliers to track their own invoice-payment progress;
• In-built alerts ensure discrepancies are resolved within a supplier’s credit terms;
• Powerful reporting tools include duplicate supplier record identification;
• Invoices are ready for payment faster plus automatic posting to an organisation’s finance system means there is less chance of receiving a re-issued invoice in the first place.
The majority of duplicate payments are small in value – but they add up. Could an invoice management solution help your business?
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