Duplicate payments in accounts payable can be a major financial drain on a small or medium sized business with high volumes of transactions being processed and paid out.  According to industry estimates, between .1 – .5% of total payments are processed twice, which could result in losses of up to $50,000 with transaction volume of $10,000,000.

Many organizations are reactive in how they identify and correct errors. As business owners with busy schedules, we often wait until problems smack us in the face before we address them, an approach which often allows errors to slip through undetected.  Even in environments with good controls, duplicate payment errors still make it through review undetected.  As a small or medium sized business, you might not feel like you have enough time or resources to monitor the details of your data to detect and identify these potential payment errors.

Peterson Sullivan LLP utilizes IDEA data analysis software, a data mining tool used to perform data analysis, by importing large volumes of data, analyzing, and reviewing to provide valuable insights into that data.  A duplicate payment occurs when a single vendor invoice is paid multiple times, resulting in at least double the cash owed to a vendor flowing out of your business.   If you are lucky, the overpaid vendor will contact you and refund your overpayment, but in many cases, these errors go unnoticed and the cash may never be recovered by your business.

Duplicate payment testing is accomplished by identifying scenarios where the same combination of vendor, invoice number, invoice date, payment amount, and purchase order number were used in a disbursements register.  Many accounting systems provide good controls to prevent duplicate payments by not allowing duplicates to be entered for certain fields such as the invoice number field, however, duplicates can still make it through this system control when invoices are entered with a close, but not exact match in those fields resulting in an overpayment. Using IDEA data analysis software, Peterson Sullivan can uncover these one-off occurrences and provide you with the insight into your data that you need to recover the overpaid cash from the vendor and gain comfort that cash is not leaking out of your business through duplicate payments.

See the example below where the accounting system might have caught the duplicate entry had the invoice numbers been an exact match, but since they were not exact, the error not stopped by the control:

Vendor Invoice Number Invoice Date Amount
Widget Maker INV2017-10-31A 10/31/2017 $20,000.00
Widget Maker INV20171031A 10/31/2017 $20,000.00

Here is another example of an error not caught by the accounting system controls when the same invoice was entered under two separate vendors:

Vendor Invoice Number Invoice Date Amount
Delta Airlines 108532 6/17/2017 $10,250.00
Delta Dental 108532 6/17/2017 $10,250.00

Using IDEA data analysis software, Peterson Sullivan LLP performs a comprehensive data mining exercise using our proprietary algorithms to detect and highlight these types of anomalies in your general ledger that are high-risk for overpayment errors and help you to quickly recover these overpayments from your vendors and restore the lost cash flow back to your bank account.  Contact Manager, Bryan Geels, for more information about how Peterson Sullivan can help you recover cash lost through duplicate payments using our data analysis tool.

Our Firm
Peterson Sullivan is a Seattle-based CPA and advisory firm known for the expertise we bring to publicly traded and closely held middle-market companies, nonprofit organizations, and high-net-worth individuals throughout the Pacific Northwest and around the world.
PS Wealth Advisors, LLC is a registered investment adviser in the state of Washington. The adviser may not transact business in states where it is not appropriately registered or exempt from registration. Individualized responses to persons that involve either the effecting of transactions in securities or the rendering of personalized investment advice for compensation will not be made without registration or exemption.