Out of Recovery: How Penn State Health Uses AI to Prevent Duplicate Payments, Removing the Need for Costly Accounts Payable Recovery Audits Institute of Finance & Management

These duplicate vendor entries can make it appear as though a payment has not been posted, resulting in double invoice payments. We also provide transaction assurance through real time duplicate payment solutions to identify erroneous payments prior to the check being cut. With security threats on the rise, companies of all industries and sizes are vulnerable.

• This use case was presented at the KNIME Spring Data Talks 2021 by Day5 Analytics Inc.
• Carefully check your vendor master file to see if the vendor is listed under a variation of their name, a misspelling, or a parent company.
• Once a new invoice comes in, it will be properly routed through the invoice process to ensure it is correctly paid.
• Third-party auditors report that much of their recoveries come from this one issue.
• Suppose a vendor normally has invoices ranging from $1,000 to $3,000; suddenly an invoice shows up for $25,000.
• And when AP teams miss payments, they not only rack up expensive late fees, but they also disturb the company’s cash flow.

The request is then either approved or rejected with the potential for the requester to resubmit. Lastly, the approved purchase order is issued an order number and prepared for submission to the vendor. The vendor approves and processes the order and the purchase order becomes a legally binding agreement.

What Are Duplicate Payments?

While human error cannot be entirely prevented, measures can be taken to reduce this type of risk. Human error often occurs during pivotal data input such as vendor, invoice, or purchase order numbers. In the past year, 25% of all duplicate payments made by TAG clients were the result of duplicate suppliers.

Based on that, AP departments should think of audits as an opportunity to inspect and uncover any issues or problems before they become serious. When you’re ready to make a payment, the platform offers several digital payment options, including ACH, credit card , and international payments. In the digital age, your payment system can enjoy the best of all worlds — centralized for better oversight, distributed for efficiency, and automated for scalability. Enjoy access to millions of presentations, documents, ebooks, audiobooks, magazines, and more ad-free.

Avoid using more than one source document

Join our community and stay up to date on the latest purchasing and payments content. Request a customized demo to see how IntelliChief addresses your organization’s most pressing challenges. Simply provide some preliminary information about your project and our experts will handle the rest. Mobile AccessExpand your operational footprint with reliable mobile solutions that integrate with your ERP system. In a recent survey of over 350 scientists ,at least half of them believe that AI still won’t be able to replace all human jobs even 120 years from now. In short, the best way to use tools like AI and automation isn’t to replace human beings but to work in partnership with them.

• Isolates the root causes of errors so you can determine how to tighten global controls.
• To avoid or detect potential duplicate payments, a company must have visibility into its payment process and control the payments going out the door.
• Many companies insist that they make no or very few duplicate payments.
• Vendors with many cancelled or returned checks are typically uncommon and may warrant further review.
• In the case of payables processes, so many invoices were previously coming in via mail.
• If you have a good relationship with your vendor — and if that vendor has their own excellent accounting practices — a simple request may be enough to get a refund.
• The losses weren’t uncovered until a post-transition audit was conducted.

Compliance demands that GAAP procedures are followed, which includes reviewing a company’s audit trail in detail at a transaction level to confirm the right accounting methods are used. According to the Institute of Financial Operations , erroneous payments, which include duplicate payments, incorrect freight, and fraud, would typically be 0.2 to 2% of an enterprise’s total AP spend. For the system checks, they have configured both SAP and Taulia to check for duplicate invoice numbers and have their team at Capgemini research any suspects. These two systems also have an interface that updates every few minutes and helps to prevent any duplicate invoice entries.

What are the Biggest Risks in Accounts Payable?

Accounts Payable and the supplier do not get notified of an invoice rejection or cancellation, implying that if your company pays a canceled invoice, the dues won’t be marked settled. Going digital makes the auditing process faster, easier, and cheaper. More importantly, it gives a business more space to pursue a progressive strategy and plan for future endeavors. It is then the responsibility of the auditor to ensure that all company records adhere to the Generally Accepted Accounting Principles, otherwise referred to as GAAP.

Adopt a single workflow for every invoice no matter how that invoice comes in the door. Whether it’s sent by snail mail to a department manager or emailed to your accounting team, every invoice should find https://quick-bookkeeping.net/kennedy-introduces-bill-expanding-louisiana/ its way into the same workflow. I’m passionate about helping customers achieve success and creating meaningful relationships. I’m experienced in customer service, account management, and customer advocacy.

Have Good Processes in Place

The script excludes payments which have been reversed so only actual payments are tested for duplicates. Internal auditors can read this before doing audit on the subject of this article. Then, flag all vendors with a z-score above 2.5, indicating the payment is more than 2.5 standard deviations above the mean. If your report is still too large, try increasing the z-score threshold to 3.0 or higher. Using SQL code or another programming language, identify all of the checks that are in one data base and not the other. In addition, identify all of the checks that are in all 3 data sources but have different payee names or different amounts and dates.

Top solutions rely on delimited data files that any ERP system can generate, so no costly integration is required. You can consolidate and analyze all data from any system, anywhere in the world, spanning different languages and currency types. As a result, you have a framework for comprehensive, global payment controls that can span multiple countries, businesses and subsidiaries. Some audit firms specialize in the detection of duplicate payments for their clients. They usually charge a percentage of the savings generated from their investigations as a fee.

OCR is a technology that captures and reads the characters of the documents while scanning them. When your invoice processing system has this, all you have to do is just scan the receipts. OCR will capture the data and enter it precisely, saving time and your company’s reputation. In fact, the Association of Certified Fraud Examiners estimates that 5% of all revenue is lost to occupational fraud every year. Fraud is not 100%preventable but there ARE steps you can take to both prevent and detect fraud on an ongoing basis.

• This may also require searching for duplicate addresses with separate business names if ownership changes due to a sale or merger of entities.
• Today, with the advances in printing and e-mail, it is no longer so simple and it’s often impossible to tell which is the original and which is the copy.
• The best way to keep it clean is to limit access for maintaining the vendor master records to one or two people.
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• It also automatically creates an audit trail, which is essential and useful to look back on should something go wrong.
• And neither of these account for the fact that duplicate payments could open your organization up to fraud.

This post explains what you need to know about duplicate payments, including 4 simple tips to help prevent them. In the past it was relatively easy to discern a faxed copy of an invoice or a second invoice. Today, with the advances in printing and e-mail, it is no longer so simple and it’s often impossible to tell which is the original and which is the copy. Suppliers regularly send pdfs of invoices— and who can spot if it’s the first time the invoice was received or a later copy? While it’s still a good idea to refuse to pay from copies or faxes, that approach won’t provide you with the same protection it did just a few short years ago. This workflow helps to score duplicate pairs of invoices which have been previously identified.

Leverage AP automation software

If you wish to avoid duplication, you must contractually enforce invoice and payment policies for all merchants. Some vendors might request a rush check before Accounts Payable Duplicate Payment Audits sending in an invoice. Complications arise when you lack backup for the rush check or information verifying that the merchant has been issued a check.

The time saving from AP automation can also translate into cost savings since the actual audit should take less time than a paper-based AP process. Many types of theft can occur in accounts payable – regular audits mitigate the possibilities of fraud, duplicate payments, illegitimate payments and related risks. That’s one reason why a bill pay platform like BILL can be so useful. It automates the manual data entry process, checks for invoice duplication, and registers each payment at the time it’s made, updating your books automatically.