Accounts Payable News^®

Regardless of the type of organisation – if you process invoices – you are also processing duplicates. In the overwhelming majority of cases the percentage of duplicates made is very small, and can therefore seem like a slightly irritating, but unavoidable part of running an AP department.

However, when an organisation makes over £50m in annual invoice payments, that small percentage could translate as £50,000 per year. In other words, it’s likely that every year, the AP Manager is heading a department which is costing the organisation as much, if not more, than his annual salary!

HFC Bank - Case Study

Background

HFC Bank plc is the UK’s largest consumer loans specialist and the issuer of marbles™ and GM® credit cards.  In 2003 it became a subsidiary of the HSBC group of companies following the acquisition of its parent company, the US-based Household International, Inc.

Overview of Duplicate Payments

Duplicate payments are an overpayment error occurring within the accounts payable department. The Institute of Internal Auditors suggests duplicate payments make up between 0.5% and 0.1% of annual invoice payments (www.theiia.org), which means one in a 1000 payments could be a duplicate. If your organisation makes £50 million in annual invoice payments you are likely paying out £50,000 or more in duplicate payments per year.

Avoid complacency

Most companies are under the false impression that they are safe from the effects of overpayments and duplicate invoicing as they feel their own internal physical controls and integrated systems controls prevent this from happening.  However, time and again we find that all companies at some point will process invoices twice.  Whilst as a percentage the figures may sound small, in a large corporation they can actually amount to millions of pound. In fact if you’re paying more than 25,000 invoices a year, you are almost certainly making losses you know nothing about. Before you can begin to tackle the problem, it is essential that you get to the root of why this is happening.  After all, accountants aren't known for their lax attitude, so if a usually meticulous and methodical accounts payable department is making mistakes, it is essential to the bottom line of your organization that you find out why.