1. A RI BA K N OW L ED G E N UG G ET S
P 2 P : M I N I M I Z E D U P L I C AT E
PAY M E N T S – PA R T I I
As purchasing systems evolve and offer more process flexibility and expanded payment options,
it is imperative that procedures be re-engineered to eliminate weaknesses that allow duplicate
payments. The extent of the problem of over payment varies across companies and industries.
However, it has been estimated that as much as 1% of all corporate remittances are duplicate or
inaccurate payments.
Should you realize that some of your current, or planned, processes are not consistent with the
recommendations that follow, it does not mean that you have rampant duplicate payments. It is
intended as a checklist to ensure you have done your best to provide the process controls to
minimize payment error. And that you have established the necessary reporting for effective
and frequent audit of disbursements.
Establish formal processing standards
• Accounts Payable should own the invoicing process
• Pay extra attention to past due invoices
• Require the supplier to identify the payment method
on invoices
• Minimize check requests
• Pay invoices on time
• Require requisitions for all but the smallest expenses
• Create and train personnel on data entry standards
• Worksheet spreadsheet should be based on a
standardized template to prevent data error
• Perform regular maintenance on the vendor master

2. Accounts Payable Should Own the Invoice Process
Without a strict policy of invoice processing initiating with accounts payable they
often circulate through the company. When this happens, payments are delayed,
a second invoice is often issued, and, as discussed above, those second
invoices can be mistakenly paid.
If processors do not use the same strict coding standards when entering invoices
those second invoices will appear to be new when they show up resulting in a
duplicate payment.
Pay extra attention to past due invoices
There is a chance they have already been paid, perhaps using an alternate
payment vehicle such as a wire transfer or p-card. Develop routines to check that
payment hasn’t been made whenever an invoice that is really past due is
presented for payment.
Change Invoices to Reflect Payment Method
Invoices paid by purchasing or credit card at the time the services or goods are
requested may be the hardest to fix. Often vendors claim they cannot suppress
the printing of invoices and continue to send them even though they were paid at
the point of purchase (POP) with a credit card.
One step you can take to guard against paying these vendors twice is to train
invoice processing staff to check invoices closely. Many of the vendors who
cannot suppress the printing of the invoice will mark it with a note saying it was
paid by credit card. Many of these notes are in very small print so your staff will
have to look closely to find the note.
Minimize Check Requests
Organizations rely on check requests to varying degree. Problems arise when
backup is incomplete or even nonexistent for an invoice paid by check request. If
an invoice is not attached, or the information is not keyed into the system
immediately, a duplicate payment is often created when the original invoice finds
its way into accounts payable.
Research shows that rush checks (often issued with a check-request form) are
one of the leading causes of duplicate payments. We realize that check-request
forms and rush checks are here to stay. What we recommend is a stringent
requirement for backup and that invoice information is keyed every time a check
is issued.
Before checks are released some routines should be incorporated to check for
duplicates. Most organizations focus on larger payments during this checking.
If you do not regularly follow up on uncashed checks and keep all back up
documentation, you may find the unclaimed property auditors deeming those
amounts as unclaimed property. Follow up and document to avoid having to turn
those funds over to the states.

3. Paying on time
Paying late may improve your cash flow; but it can actually lead to duplicate
payments. When a vendor hasn’t been paid within 30 days, most issue another
invoice. Unfortunately, these second invoices occasionally get paid. It is
recommended that all organizations need corporate approval before unilaterally
stretching payments to improve cash flow.
Requisitions should be Required
Relying on an account payable’s memory as a guard against duplicate payments is
one of the weakest and most ineffective ways to protect against this problem. Ariba
P2P will raise an exception when a purchase order exceeds the approved amount. If
no purchase order is issued for an item; there is no programmatic check against a
duplicate remittance.
Example, if an invoice number is 000482, most OCR solutions will read in all of the
digits, i.e. 000482, as the invoice number. If your manual process is not to enter
leading zeros then you will entered the invoice as 482; causing a duplicate payment.
Invoices without invoice numbers are another source of duplicate payments. A
standard process for creating an invoice number where one does not exist should
create the same unique number no matter who uses the strategy. For example;
Supplier Number plus invoice date creates will create the same number no matter
who processes this invoice.
Standardize Spreadsheet Worksheets
Spreadsheets are another point of trouble. Data entered with leading zero’s (as in
the example, 000482, above) in a spreadsheet will lose those zero’s. Uploading a
spreadsheet to the invoice application can cause the invoice number to miss a
duplicate. Any invoice processing spreadsheet should be based on a standardized
template that enforces data formats to prevent the loss of leading, trailing, or special
characters.
Maintain the Vendor Master
If the master file in not cleansed at least once a year of all inactive accounts,
employees may inadvertently pay an invoice against an inactive account and then
pay the second invoice against the correct account. Also, inactive master vendor
accounts facilitate fraud. Vendor master files should be reviewed quarterly, at a
minimum, to inactivate old vendors not used anymore as well as identify and remove
duplicate vendors.
Ideally, one person should own the vendor master file. If this is not practical, then a
report should be run of all changes made to the master vendor file periodically. This
report should be delivered to the manager that owns suppliers to review it. The
purpose of this file is two-fold: to prevent employees modifying the file for fraudulent
purposes; and to make sure the vendor coding makes business sense.

4. Create and Enforce Data Entry Standards.
Insisting on original invoices used to be a pretty good control against duplicate
payments. That is no longer true. Today, many companies send invoices by e-mail.
With advances in technology there can be 15 original copies of an invoice. Make sure
your processors are not printing them before processing and then inadvertently
processing the printed invoice as well as the electronic one.
If you have very rigid standards for entering invoice numbers and coding standards
this shouldn't cause you problems. But even the best trained staff can incorrectly
process a payment. Most systems, including Ariba P2P, will not allow the entry of a
duplicate invoice number. Unfortunately, all that is required to pass an invoice is an
added blank space, a period, or some other insignificant character to the end of the
invoice number and it will force it through. This can be done either inadvertently, or
deliberately to get an invoice off their desk. Standard audit reporting on invoices,
sorted by invoice number, will allow auditors insight into where an invoice may have
been passed through the system.
Items that should be considered when establishing data entry standards for entering
an invoice number are:
• Are leading zeros entered?
• Are non alpha-numeric characters entered?
• What should be entered if there is no invoice number?
• What format is used to enter dates?
• What should the invoice number be if there is only an account number?
• What should be entered if the invoice number is longer than the allotted space
within the field?
Many companies are moving to OCR (Optical Character Recognition) software which
scans the invoice and pulls off the vendor, invoice number, invoice date and
amount. If you are using OCR technology, be sure that your manual data entry
standards for entering an invoice are aligned with your OCR technology. For
example, if an invoice number is 000482, most OCR solutions will read in all of the
digits, i.e. 000482, as the invoice number. If your manual process is not to enter
leading zeros then you will entered the invoice as 482; causing a duplicate payment.
Invoices without invoice numbers are another source of duplicate payments. A
standard process for creating an invoice number where one does not exist should
create the same unique number no matter who uses the strategy. For example;
Supplier Number plus invoice date creates will create the same number no matter
who processes this invoice.
With all the new payment and invoice delivery options now available,
every company needs to be concerned about:
• Payments being made twice using two different payment types
• Unscrupulous employees or vendors taking advantage of the
increased "opportunities" to hide a duplicate payment.
• Professionals in numerous departments making payments without a
formal process intended to avoid duplicate payments
***Content for this Knowledge Nugget was contributed by David L. Brooks II , Ariba Technical Consultant