Duplicate payments on invoices occur far more frequently than most organizations realize. According to Concur.com, a typical small business processes approximately 450 invoices in a busy month and experiences an invoice duplication rate of around 1%. This doesn’t sound much, but it means about six duplicate invoices are received monthly. Some of these then get approved and paid, with a 2015 Infor.com study concluding that duplicate payments happen in up to 0.1% of all invoices. For an organization with annual payments of $100 million, that could signify a loss of $100,000.
This has been further compounded in recent times with the advent of electronic invoicing, where an ‘original’ invoice can be issued multiple times. The same invoice can now be sent by post, email and via online portals. A vendor may submit an invoice via post only to later send the same invoice via email as a reminder that the invoice has not yet been paid.
AMTRAK discovered in 2013 that it had made millions of dollars in duplicate payments. In the subsequent investigation and report, they identified some key areas in the process where errors were made, including staff not ensuring that invoice numbers were accurate and having a process which allows vendors to submit invoices to multiple offices.
Preventing duplicate payments has considerable benefits other than simply preventing the financial loss; companies also reduce the time spent investigating and rectifying these errors. Under the Sarbanes-Oxley Act of 2002, companies are required to proactively prevent errors. One way to mitigate the chances of this is to get your vendors to send their invoices in a consistent and specific way and in order to better track and identify duplicate invoices.
Generally, approving invoices internally also has low priority and even lower attention. Executives with the responsibility to approve large invoices rarely actually check the validity of the invoices, or are able to easily recall if they have been previously approved. Neither can you rely solely on computers to ensure you never process duplicate invoices; you still need a human eye to scrutinize what is happening.
Considering that 64% of organizations rely on manual processing to detect duplicate invoice payments it’s no wonder errors can happen. At DA-Desk, we are using a combination of technology and human intervention to ensure the invoices received are unique. We do this by using existing Optical Character Recognition (OCR) technology which scans each incoming invoice for its unique characteristics, such as the invoice number, the amount and the date of service provided. This can flag up multiple false positives (such as when a single cost is split between two port calls), but at least it means one of our knowledge workers can then investigate, compare and then manually process the invoice.
At DA-Desk, we are committed to methodically and systematically checking invoices. Call us, to make savings your next port of call.
By Mark Franklin, Operations Director, DA-Desk
First published on Mark's Linkedin