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How to Prevent Duplicate Payments

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedOct 20222 min read

Whether you manually process invoices or use automated invoicing software, the occasional duplicate invoice payment might slip past your system. This can lead to confusion, accounting errors, and even issues with your tax returns – so it’s important to prevent duplicate payments in the first place. Here’s how.

What are duplicate payments?

Also called a double payment, a duplicate payment describes the situation where a business pays the same invoice twice. For example, you might receive an invoice from a supplier and accidentally pay it both on the 1st and 15th of the month. This situation arises when there are flaws in your accounts payable processes at some level. While normally any payables software will detect and flag duplicate invoice numbers, occasionally these are mismatched.

In many cases, the supplier will let your business know when you’ve inadvertently made a double payment. Yet this is not always the case, particularly when the supplier is a large corporation processing hundreds of payments per day. When duplicate payments go unnoticed, it eats into your profit margins and bottom line.

What causes duplicate invoice payments?

The first step in preventing duplicate payments is understanding their root causes. Automated accounting software is designed to detect duplicate payments, but sometimes invoices can slip through the cracks. Here are a few reasons why:

Unintentional data entry errors: This is more common when your accounts payable department manually enters details for multiple invoices each day. It’s easy to make small mistakes such as misreading numbers and letters (S instead of 5, for example).
Duplicate vendors in the system: If your system includes duplicate entries for the same vendor, this can cause the invoice to be paid twice. Mergers and acquisitions might cause a vendor’s name and banking details to change. If the original entry isn’t deleted, this causes a double payment.
More than one source document: If a single supplier sends you an invoice via two different methods, such as email and fax, both could be entered into the system as separate entries. The system would have two source documents for a single payment, leading to a duplicate.

How to detect duplicate payments

Now that we’ve given a few examples of what causes double payment, here’s how to detect duplicate payments:

Schedule regular reviews of all master files to search for inconsistencies.
Set up a monitoring tool that searches for duplicate invoices before all payment processing.
Scan for duplicate source documents, which can indicate the possibility of a double payment.
Take extra care when dealing with vendors going through mergers and acquisitions.

How to prevent duplicate payments

It’s difficult to prevent duplicate invoice payment entirely, but you can certainly minimize the risk with a few simple safeguards. To tackle the issue of data entry, standardize your invoice and purchase order system across the organization. Be very clear about capitalization, punctuation, and invoice number generation. Put QA systems in place to spot-check work and flag inconsistencies.

Another way to standardize your accounts payable department is to ensure that all invoices are sent to a single location. This routes them through the same scanning process, reducing the possibility that some fall through the cracks. It also prevents the same invoice from being duplicated by multiple departments.

Despite your best efforts, automated software will always be better at spotting discrepancies than manual systems. GoCardless integrates with over 300 partners including top invoicing software, enabling businesses to collect customer payments directly from bank accounts. This cuts down on the potential for any duplicate or failed payments. As a result, 97.3% of GoCardless payments are collected successfully on the intended date. While 1 in 6 SME payments remain unpaid after 90 days, using a payment solution like GoCardless helps eliminate the stress of late payments – both for the payee and payer.

Ultimately, the best system will use a combination of standardized processing procedures, internal controls, and a blend of automation and human oversight.

We can help

GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.