Often in the accounts payable world, we tend to focus much of our time on efficiency and optimization and not enough time measuring error rates. Some of these KPIs can include:

● number of invoices processed by employee

● the average cost to process payments and invoices

● payment timeline & mail float

● e-invoicing and e-payments as a percentage of manual invoices and payments.

These are all great indicators to help find gaps in your processes and then begin to develop solutions. However, error rates are just as important as they can have a negative financial impact. This is especially true if the core of your business is to provide accounting services as is the case with property management and accounting/bookkeeping firms.Metrics to measure error rates can include:

● overdrafts

● overpayments & underpayments

● incorrect vendors paid

● late fees & cancellation notices resulting from missing invoices (insurance & utilities)

● payment voids

● payments outstanding over 90 days

● rush/emergency payments

● lastly, duplicate payments which I’ll focus on today

Most accounting or payables management systems do not have robust criteria built in to identify and stop duplicate invoices from getting processed and ultimately being paid. Default controls will flag anything with the same vendor and invoice number, however, this is not enough. The biggest risk comes from vendors who are unable to provide a document with an invoice number. For example, insurance, utility, government agencies, small businesses, or even travel & expense (T & E) reimbursements. Luckily, there are a few ways to identify these.  

Step 1 - Develop robust criteria which include: Invoice Number, Invoice Date, Invoice Amount, and Vendor.

Step 2 – Identify all your payment systems and develop a query to extract this info. Some companies operate with multiple accounting systems. For example, one for vendor invoice processing, another for T & E, and to add to the complexity, p-cards.  

Step 3 – Combine all the data in one central repository and use the criteria in Step 1 to flag potential duplicates.

● You can do this in Excel, however as your report grows Excel won’t be able to handle the processing. In order for this to be effective, you have to update Excel daily as new invoices are processed.

● You can outsource and have a programmer create an application for you. The programming language, Python can be used as the basis for this application.

● The last option is to purchase an existing software solution like IDEA. This is a robust system not only used to identify duplicate payments but potential fraud. The system can be customized with more criteria than just the ones listed in Step 1. For example, you can have it also flag duplicates based on sequential invoice numbers or have it match employee records with your vendor list.

Whatever method you choose to identify, at the very least your payables department should track them, develop root cause and remediation steps to prevent. Although it may not seem like a problem area, all it takes is a few duplicate payments in the tens of thousands of dollars to cause a negative impact in your organization.  The worst case is attempting to recoup the funds and the vendor is unable to pay it back.