Last editedJul 20222 min read
When a business pays the same vendor twice for goods or services, that’s known as a duplicate payment. As you can imagine, these costly mistakes can cause significant losses, both in the case that lost funds aren’t recovered, and through the time and resources it takes to recover them.
While completely eradicating duplicate payments is not always possible, identifying the issues that lead to them can help you take preventative steps to drastically reduce them.
With that in mind, below we’ll take you through some tips and guidance on how to prevent duplicate payments.
How to avoid duplicate payments
In order to take steps to prevent them, you need to first identify the causes of duplicate payments. Below, we’ll outline some of the most common causes of duplicate payments and how you can use this information to prevent them occurring.
1. Poor data entry practices
In some cases, you may have two separate entries for one company under similar names, for example Brick Lane Vendors vs Vendors of Brick Lane Ltd. If you only rely on the name of the entity as an indicator of whether an invoice needs to be paid, then it’s highly likely the accounts payable team will mistake this for being two separate companies and so duplicate payments will be made. To avoid this, create a consistent, unique label to refer to this company in data entry and delete any other labels/names.
Similarly, invoice coding standards should always be met by accounts payable personnel. Sometimes, an invoice can be paid twice if a single digit is added to its unique code, as this will make it appear to be an entirely different invoice. AP managers should ensure employees refrain from adding digits or letters to invoice codes.
2. Not sorting and organising copies of invoices
While photocopies or faxed copies of invoices used to be fairly easy to spot, today printing and copying is so advanced it often resembles the original perfectly. This can make it very easy to mistake an invoice copy for an original and make a duplicate payment. To prevent this, always keep track of originals and a clear, detailed record of which invoices have been paid.
3. Payments made by employees outside of accounts payable
Some organisations allow non-AP employees to handle payments. While this is not necessarily a bad thing, it does open up the payment process to more error if staff are not thoroughly trained on strict coding standards employed in accounts payable. This can lead them to incorrectly close out a purchase order, leading to a higher chance of duplicate payments. The solution to this is to ensure that all employees handling payments have thorough and sufficient training on how to do so correctly. Duplicate payments aside, this strategy will also help keep finances as a whole in better order and improve compliance.
4. Human error
When there is a large volume of invoices, mistakes are bound to be made. These may come in the form of typing and keying errors, or absent-mindedness and forgetfulness of employees. Either way, it can lead to duplicated payments.
While human errors of this nature are difficult to completely eliminate, they can be significantly reduced through the use of accounting software payment solutions. GoCardlessintegrates with over 300 partners, such as Xero and Sage, which are among the best invoicing software available. This enables businesses to collect customer payments directly from bank accounts, reducing the likelihood of duplicate or failed payments. As a result, 97% of payments are collected successfully on the intended date. With late payments being such a huge issue facing SMEs today, using a payment solution like GoCardless helps put an end to the stress of late payments – both for payee and payer.
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.