How to Detect & Avoid Duplicate Payments in Accounts Payable?

Mistakes are a part of any business, but what if you mistakenly pay a bill twice? 

This is known as a duplicate payment and can cause a loss of money.

In this blog, we will talk about how to avoid this common financial pitfall and some ways by which you can avoid making duplicate payments.

What are Duplicate Payments?

Payments made more than once for a single invoice are known as duplicate payments. Duplicate payments happen entirely because of mistakes, which results in a loss of money for the business.

Common Reasons for Duplicate Payments

Common reasons for duplicate payments include:

• Mistakes in entering data: Sometimes, when people type the information for a bill, they might make an error or enter it twice by mistake.
• Duplicate vendors: There might be a possibility that your company has a vendor listed more than once in the database. Another situation may also arise where two suppliers have similar names. This may lead to confusion, resulting in duplicate payments.
• Multiple invoices: A vendor might accidentally send the same bill more than once, and the company pays each one without realising they're the same.

How to Detect Duplicate Payments in Accounts Payable?

After explaining why payments might be made twice, here's how to spot and stop duplicate payments:

• Use a good software or tools: There are good accounts payable solutions designed to help you detect duplicate payments. These tools can also warn you in advance if it looks like you're about to pay the same invoice again.
• Regularly check your payment records: It's important to routinely go through the records where you keep information about payments and suppliers. This helps you find any mistakes that might indicate you've paid the same bill more than once. 
• Look out for copies of the same document: Sometimes, having more than one copy of a bill or order form can lead to accidentally paying it twice. Make sure you have a good system for keeping track of these documents, ensuring each payment matches with only one correct document.
• Be careful with suppliers that are merging with or acquiring other companies: When a company you buy things from merges with another company or gets acquired by them, you need to be extra careful. These changes can lead to confusion about where to send your payment or might change the details of what you're being billed for. Keep in close touch with these suppliers to make sure your payment information is correct and up-to-date.
• Review and audit regularly: Every so often, look through your payments to see if anything was paid twice by accident.

How to Prevent Duplicate Payments in Accounts Payable?

Stopping the same bill from being paid more than once in your business's accounts involves careful planning and setting up a system of checks. Here are some simple and straightforward steps to follow:

• Use accounts payable automation software: Get software specifically for handling bills that can automatically spot if you're about to pay the same bill twice by checking new bills against ones you've already got.
• Create a standard protocol to handle bills: Create a clear, uniform way to deal with bills. This should include steps for entering the bill details, verification, and authorisation for the bill to be paid to reduce both errors and fraud. Further, accounts payable automation mitigates the risk of duplicate payments to a large extent.
• Check all processes regularly: Regularly go through your bill-paying process and the bills you've paid to find any repeated issues with paying the same bill more than once. Use what you find to make your process better.
• Undertake robust data matching: Before paying a bill, make sure it matches up with the order you made and what you received. This 3-way matching process ensures that you only pay when everything adds up correctly.
• Maintain an updated vendor database: Keep your vendor information current and accurate to avoid confusion and mispayments. Regularly review and clean up your vendor list to remove duplicates and update details. 
• Maintain an optimal vendor base: Reducing the number of vendors you work with is an effective procurement strategy in the long run. By working with a lower number of vendors, you can not only leverage better volume pricing and better terms, but it also reduces the risk of duplicate payments.
• Create safety measures: Set up and follow strict rules, like making sure different people handle different parts of paying bills, to prevent one person from having all the power in the payment process. This helps prevent the same bill from being paid more than once, on purpose or by accident.
• Talk to your suppliers: Always keep in touch with the people you buy things from about how they should send you bills and how you will pay them. Ask them to use the same format for their bills and to include an order number.
• Use fewer ways to pay bills: Make paying bills easier by using fewer ways to pay. This makes the whole process smoother and lowers the chance of paying a bill twice by mistake because of mix-ups with how you pay.
• Pay bills on time: Always pay your bills as soon as you can. This keeps your relationship with the people you buy from strong and helps you avoid extra costs for being late. Paying right away also makes it easier to keep track of your money and stops you from missing or paying something twice.

To protect your business's money and avoid paying a bill twice, it's wise to use software designed for this, have clear guidelines for payments, review everything carefully, and train your team properly. By doing these things, you can prevent errors and ensure your business spends its money wisely.

Also Read
Accounts Payable Fraud Detection and Prevention Controls
Ways To Improve the Accounts Payable Process
Accounts Payable Journal Entry: Types & Examples