Duplicate payments are rising, causing real financial risk and massive inefficiencies in accounts payable. Often caused by well-meaning but misguided vendor policies and sometimes the direct result of fraud, we'll explore why duplicate payments are on the rise and what to do about it.
Why are duplicate payments on the rise?
During the COVID-19 pandemic, more businesses demanded to be paid digitally, most often via ACH. There were several contributing factors, not the least of which there was no one in the office to process checks. The ACH network reported a 17.4% annual growth in dollar value from 2020 to 2021. That's the largest single-year growth ever. While the transition from paper checks to digital payments process is underway, it is not uncommon for AP teams to double pay - especially in times of stress.
Changes to postal service policies implemented in 2021 are causing checks to be delivered later than previously experienced. This delay is causing vendors to send additional invoices resulting in more work for AP teams and sometimes duplicate payments.
Duplicate invoices are flooding inboxes because sending and resending an invoice has never been easier. Some estimates show that 25% of invoices are sent more than once. The proliferation of email is drowning some AP teams causing inadvertent errors and duplicate payments. There are even reported cases of vendors intentionally sending multiple invoices to different email addresses in the same company hoping that someone can get them paid.
All of these factors have created the perfect storm for unnecessary payments, not to mention the rise of email fraud called Business Email Compromise which we wrote about in other blog posts.
What to do about it?
Duplicate payments can arise for many reasons, both unintentional and intentional. Here are some steps to take to mitigate duplicate payments
Deal with duplicate invoices coming from your suppliers. Mary Schaeffer at AP Now has a brief podcast on steps to limit duplicate invoices.
Create, document, and train on a thorough invoice handling policy. Good processes go a long way to mitigating duplicate payments.
Pay your suppliers quickly (even early) using a payment orchestration platform like Speedchain.
Make your processes digital. The quicker you can get the invoice data into a secure digital environment the better off you'll be.
Speedchain provides secure check, ACH, and virtual card payments at scale. Our cloud-native platform was built from the ground up to provide super-powered payments for the modern finance team. Contact us today for a free consultation on duplicate payment mitigation strategies.