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The order team

The accounts payable department in any company is a hive of activity, with a team of professionals working daily to keep the company’s financial wheels in motion.

But all that motion leads to negative outcomes if you don’t have a foolproof system in place. 

One of the most common and costly issues AP teams face is duplicate payments. These erroneous payments happen when someone enters an original invoice incorrectly or a second invoice enters the processing system. 

How can you prevent the conditions that result in duplicate payments? What steps can you take to maintain data effectively? Let’s explore ten ways to make your invoice process dupe-proof. 

In this article, you’ll learn everything you need to know:

  • What duplicate payments are
  • Why duplicate payments happen
  • Ten ways to eliminate duplicate payments
  • How software makes eliminating duplicate payments easier

What are duplicate payments?

Duplicate payments occur when you erroneously pay a vendor invoice twice. At best, duplicate spend is caught and rectified. It takes Accounting's time and focus away from other activities, but at least the loss is recovered.

At worst, the double payment goes unnoticed or is caught later in a recovery audit. In these cases, the damage to company finances is permanent. It’s an expensive and pervasive problem, with the average company spending up to 2% of revenue on payment duplication.

Duplicate spend is harmful to your financial health and reporting accuracy. It can cause cash leaks, invite fraud, and cause problems securing funding. In even minor cases, duplicate payments lead to frustration and potential company cash loss. 

How to eliminate duplicate payments

Inadequate processes and budgetary controls are often the culprits in cases of duplicate spending. To avoid or detect potential duplicate payments, a company must have visibility into its payment process and control the payments going out the door. 

To reduce or eliminate duplicate invoice payments, build these practices into your accounts payable routine: 

  1. Reduce manual invoice data entry 

Manual entry mistakes during the invoice entry process are often the root causes of duplicate payments. An error entering the invoice number or another piece of identifying data may cause the incorrect payment.

This human error may occur with your internal AP department or in the issuing company’s AP process. In either case, small errors can have big consequences. Using technology to electronically capture invoice data (for instance, by automating electronic invoice entry or digitizing paper invoices with a scanner) eliminates this manual task and its associated errors.

  1. Collect standard vendor documents

Tying all vendors back to updated W4 vendor information is one way to ensure the vendor only appears in your database once. Insisting on W4 data from each vendor enables Accounting to work within that vendor’s record.

Not only does collecting W4 data from each vendor ensure accuracy in your records, but it also confirms that the vendor is legally allowed to do business with your company and is responsible for their tax collection efforts.

  1. Cleanse your vendor database

When multiple stakeholders buy supplies or sign contracts, vendor databases may end up with duplicate entries of the vendor master file. These duplicate vendor entries can make it appear as though a payment has not been posted, resulting in double invoice payments. 

To prevent this duplication, regularly audit and cleanse your vendor databases. Ensure that only one entry per vendor appears in your accounting roster. This may also require searching for duplicate addresses with separate business names if ownership changes due to a sale or merger of entities.

  1. Pay open invoices promptly

Backlogs of unpaid invoices are more likely to create problems in invoice processing. Set up new vendors in the system as soon as invoices arrive and pay those invoices in a timely manner. Not only will prompt payment strengthen your vendor relationships, but it will also cut down on confusion in your AP department if vendors send a second invoice as a reminder for payment.

  1. Reduce the number of vendors you work with

Streamlining your preferred vendor list is part of an effective procurement strategy, and it cuts down on the clutter in your vendor management systems.  By reducing your vendor list, you may take advantage of better volume pricing, multi-site discounts, or more flexible contract terms. It also reduces the likelihood of misapplied payments in your invoicing system.

  1. Limit vendor payment methods

Many companies still operate their AP departments using paper checks. This system of payments creates issues and possible redundancy.

Limiting your vendor payment options to automated electronic payment forms reduces the likelihood of processing payments multiple times. Wherever feasible, use electronically traceable methods to pay vendor invoices. Many vendors accept electronic payments like ACH wire, making it easier and less risky to pay the bills.

  1. Centralize invoice processing

Establishing a centralized process for accepting, coding, and processing invoice payments illuminates many of the risks associated with accounts payable. Moving to a centralized vendor payment system also opens the door to process automation in invoicing. It allows you to tie every invoice to a purchase order. 

AP automation software not only makes invoice processing more streamlined, but it also operates 24 hours a day — much more quickly than an AP clerk entering payments manually.

  1. Conduct regular AP audits

Visibility is your best friend when catching and resolving overpayments. Regular accounts payable audits and reconciling invoices at the end of every month help the accounting team spot errors or possible problems. A clean audit trail also increases the accuracy of month-end reporting for teams creating financial statements.

  1. Establish a standard workflow

Lack of a clear workflow makes duplication more likely. For instance, multiple AP clerks working on processing may duplicate a payment if there isn’t a clear process. If you must manually process, ensure that each invoice proceeds through a standard payment workflow (for instance, all invoices from a specific vendor going through the same clerk). 

Ideally, you should automate your workflow through a procure-to-pay platform that uses AI to match, reconcile, process, and pay each invoice. These systems make duplicate payments less likely and create a historical record for every payment transaction. 

  1. Use accounting tools to spot fraud

While the majority of duplicate payments result from manual entry errors or miscommunication, poorly managed accounting departments also increase the likelihood of procurement fraud. 

Procurement or invoice payment software often has features that can spot fraud as it occurs by flagging suspicious or duplicate payments. While over 5% of corporate spending is lost to fraudulent procurement, employing cutting-edge tools reduces the risk and the likelihood of fraudulent activity.

How Order helps eliminate duplicate payments

Procurement & AP automation software like Order creates maximum visibility in your invoice processing practice. Order centralizes and automates processing, making errors and fraud less likely.

Here are some of the many sophisticated features Order offers: 

  • Automatic general ledger (GL) coding of every invoice to accurately report expenses
  • Centralized purchasing and invoicing information that allows you to quickly and easily find the accounting information you need
  • Real-time spend and invoice data highlighting spending by department, location, role, category, project, and more
  • Consolidated billing that allows you to pay and process just one weekly or monthly invoice instead of hundreds

Have duplicate payments cost your company time or money? If so, a better process is within reach. Start by scheduling a demo of Order to see how software can help you double your productivity instead of your vendor payments.