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, 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.

Although the number and size is typically less than compliance or pricing errors, such overpayments are feared by Accounts Payable managers as the responsibility is on them to ensure the errors do not slip through the net.

How do they occur?

ERP or payments platforms should have the controls in place to flag, track or catch duplicate payments. Yet, the likelihood of human error means none of the packages are sophisticated enough to prevent more than about 70% occurrence.

A typical invoice entry includes an invoice number, date, amount, vendor number and many other fields. Any of these entered inaccurately or inconsistently means the system’s check for duplicate payment will not be effective. Add in problems caused by not having a defined invoice numbering system in place, and it’s easy to see how overpayments slip through. Having multiple payment systems virtually guarantees that cross-platform duplicate payments will not be flagged.

Duplicate Payments: By the Numbers

• The average large organisation accidentally pays around 1 in 1,000 supplier invoices twice. At that rate, over five years, a business with annual costs of £100m could have wasted £500,000.
• A significant minority of large businesses pays over 1 in 200 invoices twice, representing a five year loss for a £100m organisation of over £2,500,000.
• The problem is often caused by such apparently trivial events as a clerk typing a letter O instead of a zero, or a letter S instead of a 5 or forcing invoices through the system with a special code.