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How to Deal with Duplicate Invoices?

With manual processes and a high volume of invoices, accounts payable (AP) places the organization at great risk of financial loss resulting from errors in payments. The costliest of these errors is payouts for duplicate invoices, with studies revealing that medium-sized enterprises lose anywhere between 0.1% to 2% due to these erroneous payouts. 

What are Duplicate Invoices?

A duplicate invoice is nothing but the same invoice being accounted for twice and more often than not, also results in a duplicate payment.

The impact of a duplicate invoice can vary from additional time and effort spent by the accountant to identify and rectify the error to losing money in case the duplicate invoice goes unnoticed. 

Causes of Duplicate Invoices

Manual Data Entry Errors

In the absence of any AP automation software to facilitate invoice data capture and coding, errors while processing invoices is one of the major causes of duplicate invoices and payments. 

Duplicates in Vendor Master

In an organization with a decentralized procurement process, multiple stakeholders may buy supplies or services from the same vendor which increases the possibility of duplication of entries in the vendor master. Due to this, the same invoice can get accounted and paid more than once against each of these duplicate vendor entities.

Multiple Channels

In case vendors send the same invoice through multiple channels – physical mail, email, or a portal, it increases the probability of the invoice being processed multiple times. These errors can be further accentuated when a business is undergoing changes like migrating systems, moving offices or changing employees. 

Fraudulent Invoices

Manual accounts payable processes make a business prone to invoice and payment fraud. These frauds may be initiated by the vendor or an employee who may generate duplicate invoices for goods and services that were never delivered. 

How to Avoid Duplicate Invoice Payments?

Automate Data Entry

Utilizing technology or tools to capture invoice data eliminates the manual activity of data entry into the accounting system. Adopting AP automation software not only prevents detrimental mistakes for the business but also saves significant time and effort for the accounting team.

Regular Audits

To ensure vendor masters are up to date and do not contain duplicate entries for the same vendor, a business should conduct regular audits and cleanse their database. Cleaning the database may also require standardizing the way business names for vendors are stored i.e. with the legal name or the DBA (doing business as) name, registered addresses, and ownership details to prevent any duplication.

Centralize Invoice Processing and Payments

Storing and processing invoices of different departments in different locations increases the complexity of maintaining the accuracy of accounts payable processes. If invoice processing is spread across systems and locations, cross-checking and verifying the authenticity of invoices becomes close to impossible. A centralized process also facilitates setting up a standard workflow where every invoice would need to go through multiple checks and approvals before they are paid. Utilizing an AP automation software for this purpose also helps secure and safe storage of invoice and payment information on the cloud. 

Implement an Invoice Matching Process

Having a purchase order process in place can prevent accounting and paying for duplicate invoices to a large extent. When incoming invoices are validated against the purchase orders, receiving notes and/or inspection slips, it helps businesses to confirm that payments are made only for supplies and services that are actually received, track receipts and payments better and check for any other potential errors or discrepancies.

Lack of visibility into duplicate invoices and payments makes businesses prone to cash leakage, fraud, and misuse. However, the right AP automation software prevents duplicate invoices from entering the processing queue in the first place and also builds a strong audit trail to record all invoice actions and payment transactions. This helps an AP department improve efficiency and achieve cost savings for the entire company.