It doesn’t matter if you are manually processing invoices or using advanced automatic invoice software, duplicate payments may slip past your system. But when it happens, it leads to so much frustration, confusion, errors, and problems in tax returns. Keeping a master data portal with vendor master data (VMD) decreases the chances of inaccuracies and account defaults.
The account payable department is responsible for all the payment-related tasks. From checking and verifying expenses to processing invoices.
However, sometimes reports can get twice as mundane on a large scale. All these errors can cause issues like duplicate payments and accounts payable in both digital systems or manually.
So, if you are one of those who are concerned about this issue, this article is for you. We will be discussing what are duplicate payments, what causes duplicate payments, and how to avoid them with the 5 simple steps in accounts payable in 2023.
Beginning with what are duplicate payments.
What are duplicate payments?
Duplicate payments are nothing but payments that are made twice. It’s also called double payments. It can cause a great loss to a company that no company wants to bear. For example, the wrong supplier paid in error, duplicate billing of the invoice, duplicate payment to a different supplier, invoice canceled but paid to the supplier, and many more.
In many cases, the supplier may inform you that you have made twice the payment. But, not all the suppliers can check and inform, especially when done in large numbers in one day. That’s when the company can feel the loss.
What causes duplicate payments?
Here are a few reasons that cause duplicate payments:
1.Unintentional data entry errors
Errors might happen while processing invoices, especially when manually entering details for numerous invoices per day. It’s become obvious to make small mistakes like misreading numbers, and typing errors.
2.Payments made outside the payable accounts department
Another reason behind duplicate payment in business is when an employee makes payment to vendors and does not inform the payable accounts department and they also end up paying to the same vendor. There’s nothing wrong if an employee pays but they must know how things get done to avoid duplicate payments.
3.Multiple source document
Usually, a supplier sends you an invoice by two different methods, one is email and another is fax. It might be possible that both could be entered into the system as different entries; this could lead to double payment to a single supplier.
Simple 5-step guide to avoid duplicate payments
1.Regular review of VMD
Most of the errors occur because of the faulty vendor master data which leads to the possibility of payment issues. So, the initial step to avoid duplicate payments is to review VMD regularly. It will help to remove the irrelevant details and deactivate the double vendors. You can also take support from bookkeeping and accounting services and then create new records.
2.Assure consistent data standards
As your consistent data standard, it means that by removing the unnecessary data you also create consistent data standards which include setting rose for payments and invoicing and assurance the same consistency is maintained across the vendor master data.
3.Training of account payable staff
It’s very important to train the employees engaged in accounting with the payable department. They must know how to track inconsistencies in payables for example multiple addresses vendors with similar names etc. An expert account payable staff can be an advantage for your business and can save you from upcoming losses. You can also avail accounts payable services to seek help for your firm.
4.Separation of responsibility and background verification
Sometimes, keeping an accurate VMD ensures data consistency and verification is not enough to reduce duplicate payments. That’s why it’s important to separate roles and responsibilities for everything related to accounting payable work. And performing a background verification is always a great idea. Make sure to check on accounts receivable services before proceeding further.
5.Verification of tax details and request W9s
At the beginning of any business, a relationship asks for their W9 forms as this will support you to verify tax identification numbers and pin other necessary details while filing corporate taxes. To cross check you can also contact the taxation department for verification.
Back-office accountants can help you to take the papers off your desk and provide solutions that are better for your firm. Schedule an appointment with them today.