Duplicate Payments
The hidden cost to your business
Most companies believe that their own physical internal controls and integrated system controls prevent any possibility of duplicate or over-payments i.e. paying a supplier twice for the same product or service or indeed paying out more than the invoice amount. Experience shows all too frequently that however efficient companies are, all will at some point make duplicate and/or overpayments. The Institute of Internal Auditors (www.theiia.org) estimate that between 0.1 and 0.5 percent of all invoices are processed twice.
ERP or payments platforms should have the controls in place to flag, track or catch duplicate payments. A typical invoice entry includes an invoice number, date, amount, vendor number and many other fields. If any of these fields are entered inaccurately or inconsistently, the system’s inherent check for duplicate payment will not be effective. This means that none of the systems can be sophisticated enough to completely eliminate duplicate payments. For the same reason built in duplicate checks in data analysis software will only pick up a small percentage of duplicates, typically less than 20%. A sophisticated testing regime needs to be applied to identify the majority of duplicates.
With high transactional volumes you are almost certainly making losses you know nothing about. The fact is that duplicate payments have been silently costing multi-billion pound losses for businesses worldwide. This is a problem that gets proportionately worse as the size of the company increases, regardless of how good its systems are.
The following are common examples of how duplicate payments arise:-
- Human error caused by the sheer volume of transactions
- Complex and time consuming authorisation processes
- Deliberate circumvention of system controls
- Changes in systems
- The use of temporary staff
- Takeovers, mergers and reorganisations
- Delays in promptness of payments to suppliers
Sometimes these overpayments are discovered by your finance or audit teams, occasionally (though not very often) your suppliers will return the funds of their own accord. Many of them remain undiscovered and are eventually lost to the supplier in question becoming a hidden cost to your business.
In today’s economic climate can you afford to ignore these hidden costs?
AuditWare, using the experience gained from its long association with IDEA and knowledge of finance systems, has both the methodology and technical skills, tested over many assignments, to identify at least 90% of these duplicate payments.
For more information email consultancy@auditware.co.uk or call us on 01892 512348.