Payment for duplicate invoices is harmful to working capital, and the occurrence of receiving duplicate invoices is far more common than most organizations realize. Research estimates that duplicate payments happen at a rate of 2%. While two percent may not appear like much on the surface, duplicate invoices can be a significant cause of an organization’s wasted spending. For example, if an enterprise’s AP invoices total $75 million annually, duplicate payments may account for $1.5 million of their wasted spending. Many duplicate payments are not identified and never resolved. However, when the AP team catches overspending after payment, the efforts to recover funds can outweigh the amount returned.
Common Reasons for Invoice Duplication
The variation of automated payment and invoicing options available to accounts receivable and accounts payable teams can increase the complexity and the probability of duplicate invoices. Errors are especially prevalent when accounting teams use multiple systems or manual entries for reconciliation and auditing. Here are some of the most common reasons why invoice duplication happens:
Data Entry Errors
Finance teams are universally overwhelmed with manual processes that are inefficient and error-prone. Without automated workflows, AP processors are susceptible to being swamped by the sheer volume of invoices received. Keying errors are a typical mistake and often result from inadvertent data-entry errors that an accounting team member makes while entering hundreds of invoices per day.
Duplicate payments are also caused by duplicate vendors in a disjointed vendor master file. AP processors can accidentally create multiple entries for a single vendor resulting in duplicates. External activities such as mergers and acquisitions or inbound interfaces to legacy systems can cause duplicate vendors as well.
Manual Check Requests
Duplicate payments may also be related to creating checks manually. Many organizations do not have numbered forms, and their check processors are responsible for generating an invoice number. This manual process creates the possibility of duplicate invoice numbers.
Plug Spending Leaks with Real-time AP Automation
Teams must quickly and accurately process high volumes of invoices to balance paying vendors in a timely manner and protecting company funds. The newest real-time AP automation technology mitigates the chances of discrepancies and eliminates unnecessary spending by detecting duplicate invoices before payment.
Optimizing working capital in volatile business conditions can be difficult when relying on manual systems. Paying duplicate invoices drains resources and makes building lean, agile operations unattainable. Without the proper AP automation software, finance teams also run the risk of limited visibility into important invoice details like payment due dates, early payment discount deadlines, or cash requirements for the next cycle. According to an IOFM study, 70% of AP departments have automated their invoice processing, and 51% of survey respondents anticipate that their AP department will eliminate most of the paper invoices currently received from vendors within the next three years.
One of the most painful tasks within accounting departments is matching invoice line items with data from a PO system. Automated accounts payable solutions capture invoice data and simultaneously validate vendor information to line items and to purchase orders. The latest real-time AP automation solution accurately audits 100% of invoices and matches every invoice item before payment to flag discrepancies and duplicate invoices for the AP team to review.
For CFOs to cultivate a cash-focused enterprise, wasted spending must be eliminated, starting with duplicate payments. CFOs should prepare for their accounts payable departments to move away from tactical tasks to be successful in the future, and implementing automated invoice auditing can help drive this transformation.
OpenEnvoy is the only real-time AP technology automation that audits every invoice before you pay to prevent wasted spending. Connect with an expert and request a demo today!