Duplicate Payments: Why They Happen and How to Prevent Them

Do you know that several companies, due to a lack of attention, end up paying the same invoice not once, but twice over several months? Many organizations struggle with this even today. Finance managers across industries are grappling with the risks that payment fraud poses. The harsh truth is that businesses from every sector are suffering from margin erosion due to duplicate payments, largely without awareness.

Organizations must deal with this grey area of concern. Finance leaders are concerned with many issues simultaneously and do not pay attention to the operational and fundamental aspects of an organization. Organizations are struggling with runaway losses from unused capacity.



Why Duplicate Invoice Payments Happen

Understanding the underlying reasons helps in preventing future occurrences. Most organizations face one or more scenarios that lead to duplicate invoice payments.

Human Error in Processing

Mistakes are bound to happen either due to a lack of proper communication or inefficient manual data entry. Employees might overlook and process an invoice twice, especially during hectic times. There are also situations where invoice numbers are entered incorrectly, leading to oversight.


Lack of Interdepartmental Communication

Handoffs among the purchasing, receiving, and accounts payable teams can be inefficient. Such gaps in communication allow invoices to pass through several approval processes multiple times. Different departments might also unknowingly approve the same invoice, leading to overlapping expenses.


Vendor Issues

Vendors are sometimes at fault as they send multiple copies of the same invoice out. Often, they resubmit invoices that they believe have been misplaced. Also, a vendor lacking a specific purchase order number will often resend copies of the same invoice, leading to payment issues.


Operational Constraints

Accounting systems still in use may simply not possess the ability to detect duplicates. Many older systems do not possess the ability to identify duplicate entries automatically.


Insufficient Oversight

Organizations lacking strong invoice review processes are open to more vulnerabilities. The absence of approval-based workflows allows duplicate invoice payments and other payment issues to remain undetected for extended periods.


Warning Signs of Potential Duplicate Payments

Identifying potential risks enables proactive problem resolution. Here are a few of the significant signs that indicate potential duplicate invoice payment issues:


Identical Invoice Details

Repeated instances of a vendor, invoice number, date, or amount should prompt an investigation.


Similar but Slightly Different Information

Invoices containing slight discrepancies in date, amount, or other numeric identifiers might be duplicates with minor mistakes.


Multiple Invoices for Single Purchase Orders

Always confirm that multiple invoices citing the same purchase order number represent actual separate deliveries or services.


Vendor Payment Complaints

Suppliers who complain of overpayment or seek reimbursement of payment tend to suggest that duplicate payment of the invoice is likely.


Prevention Checklist to Stop Duplicate Payments Before They Happen

Utilize this checklist to create solid controls that prevent the payment of duplicate invoices within your business:


System Controls

  • Integrate software that automatically identifies duplicates
  • Establish invoicing criteria in your ERP system
  • Design rules for possible duplicate transaction alerts
  • Allow three-way matching (purchase order, receipt, and invoice)
  • Set controls on the vendor master file to disallow duplicate vendors


Process Improvements

  • Identify formal approval pathways for invoice payment.
  • Require a unique purchase order for every procurement request.
  • Standardize issuing invoice numbers to vendors.
  • Apply a policy of segregation of duties in the approval process.
  • Institutionalize regular reconciliation across departments.


Staff Training and Awareness

  • Teach all accounts payable staff how to identify duplicates
  • Train the purchasing team on proper vendor interaction
  • Define appropriate procedures for escalation concerning marked invoices
  • Establish documentation for non-standard transactions
  • Hold routine training refreshers


Vendor Management

  • Train all suppliers on how and where to submit invoices
  • Outline preferred invoicing methods for suppliers
  • Provide online access for vendors for uniform submission
  • Develop policies regarding invoice resubmission
  • Update vendor contact details regularly


Regular Monitoring

  • Perform reviews on duplicate payments every month
  • Compile reports on payment behaviour every quarter
  • Perform annual audits of vendor payments
  • Ensure accuracy of payments with KPI evaluation
  • Review trends on duplicate payments



Withstanding Success

Monitor the key indicators to analyze what efforts were made to prevent duplicates from occurring. Track the number of invoices that are flagged for review, as well as the resolution time for potential duplicates.

Value metrics should also be taken into account. Compute the value of all duplicate invoice payment savings. Evaluate processing costs relative to the base period after new controls were implemented.

Payments that are made in excess have a negative effect on business as they create a loss, affect cash flow in use, and consume time that is meant for fund recovery post detection.


Attain Control Over Your Corporate Payment Strategy Now

Although paying duplicate invoices might appear like a minor error, they gradually eat up money and undermine vendor confidence. However, the good news?  The correct resources and proactive tactics can completely avoid these errors.

With top experts at Discover Dollar, we would help you identify and stop duplicate payments before they turn into a financial hazard. Behind the scenes, our AI-powered platform will strengthen your accounts payable system, identify hidden overpayments, and flag hazards without requiring more labour from your team.

Connect with us today to avoid accepting duplicate payments and make your detection more intelligent.



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