Business means procurement of goods and services that must be paid for. For the smooth running of business accounting practices must be efficient. Goods and services procured need to be paid off on time. It is primarily the responsibility of the Accounts Payable Department of the company to ensure the smooth management of receipt and payment of invoices that the company receives.
Manual Practices Prone to Errors
When done manually, it becomes quite a tedious job to organize invoices, track down approvers and ensure that the invoices are aligned with the budget. All this leaves good scope for human error to creep in. It is not unheard of in companies for the accounts department to get tied up due to faulty entry, late payment, missing invoices, and worst of all, double payments. All this silently drains company resources without the top management ever realizing it.
How Does Duplicate Payment Occur?
A duplicate payment occurs when an additional payment is made to a supplier that has already been paid. It is primarily either because of the faulty manual process or the flaws in the payable software that fails to detect the presence of prior payments on the same invoice. One of the most common cases of duplicate payments happens when the supplier invoice does not have an identifying invoice number as is generally the case with periodic billing.
Some audit firms specialize in the detection of duplicate payments. Hiring them would mean additional costs for the company.
Impact Of Duplicate Payment
Each extra dollar send to a vendor through an error, does not just impact the bottom line of the company, but it also means a dent in the company’s brand image.
In addition to the extra money paid to the vendor, it is another task or cost to recover the amount from the vendor. It may jeopardize the long-term relationship built with vendors over the years with a great deal of care.
It also opens the company to the possibility of fraud. Often it is the honest mistake that is the starting point of fraud. A vendor along with the employees in the company can be tempted to take advantage of the loophole in the system and float fraudulent bills to make most of the inefficiencies in the system.
Recently companies have been shifting to automated processes to cut down on these inefficiencies and deploy human resources in more productive work.
AP Automation Can Check the Double Payments Menace
It is not humanly possible to eliminate duplicate payments even by identifying the issues that can lead to them and taking relevant steps to prevent them. However, the problem can to a great extent be tackled by going in for automation of invoice processing.
- Visibility: A standard account payable automation software brings together accounts payable communication, corporate spending, and check payment all in one place, giving visibility and full control of corporate transactions.
- Secure Data: Audit histories of approved bills are stored in the AP automation system and can be assessed anytime. The artificial intelligence-driven software can check the data and detect any anomalies before it takes place.
- Reduces Errors: As is the case, most of the Accounts Payable software uses optical character recognition (OCR) to capture and analyze data from invoices. This makes it easier and faster to avoid errors in terms of the payment amount and the budget category and, most importantly, it reduces the chances of duplicate payments to vendors.
Automation In Accounting and Bookkeeping Services
While outsourcing accounting bookkeeping services is a great idea to save costs, one of the criteria for selecting the service provider should be that the company has creditable automation software installed. This will ensure the quality of services. It is especially true when you are looking for professional accounting services. Given the sheer number of transactions, there are greater chances of double payment.
Improves The Communication Flow
By focusing communication on the top of the invoice itself, the AP department finds itself in a better position to collaborate and communicate with the approvers, vendors, and any other stakeholders involved, with purchases. In other words, hiring phone answering services not only speeds up the payment processes but brings a great deal of accountability to the system. A healthy AP system gives out a signal of transparency and commitment to the market.
Frees Staff More Meaningful Work
As automation means less work for the accounts payable teams, companies do not need to hire as many people for checking and approving payments. This opens up opportunities for saving resources in terms of time and labour.
Automation is great for weeding out duplicate payments and it does it fast and easier than done manually. The automation solution is not prone to making coding errors and like all machines, can examine a humongous amount of data where the human mind finds itself limited by time and resources. It also means a more satisfied workforce as it frees them for other important tasks.