Five best practice tips ensure your company’s multiple-payment vehicles don’t translate into duplicate payments.June 4, 2009
by Mary Schaeffer
For years, we heard stories about duplicate payments occurring when the payment was made by a wire transfer and then by check. While definitely a serious issue, it didn’t cause much concern because the number of wires was generally small and the dollar amounts so large that a duplicate payment stood out like a sore thumb. With the increased usage of p-cards in corporate environments, duplicate payments because of multiple-payment vehicles have suddenly become an issue deserving the attention of everyone involved in the payment world.
How Serious Is the Problem?
A recent survey on duplicate payment conducted by Accounts Payable Now & Tomorrow, asked its readers if they had noticed an increase in duplicate payments due to use of different payment vehicles, i.e. a check and a p-card or ACH, or wire. Surprisingly, one out of two (53%) answered yes. While this number is startling in and of itself, we believe it actually understates the problem.
A number of respondents indicated they “were not aware of such a problem.” While some may be lucky because the problem doesn’t exist in their organization, this is not true in most companies in which the problem is hidden and has yet to be discovered.
And, of course, those who haven’t uncovered an existing problem cannot report it. What’s more, as you will see below, a number of the respondents indicated using controls that do not work or only partially addresses the problem. As organizations continue to move away from paper checks, the problem will get worse unless appropriate action is taken and proper controls put in place.
Absolute Best Control
The best way to make sure that duplicate payments aren’t initiated by using duplicate payment vehicles is to pay each vendor with only one vehicle. Organizations that take this approach often include this designation in their master vendor file. However for many of our readers, this solution is not always practical. Either the dollar limits on their p-card program or the necessities of their business operation make the one payment vehicle rule impossible to enforce or use.
By the way, should you be able to use the one payment vehicle per supplier rule, do not be lulled into a false sense of security that you have your potential duplicate payment issue under control. There are many other things you’ll need to do before you can rest easy on that front.
Controls That Don’t Always Work
Many of the survey respondents acknowledge that they haven’t addressed the issue of duplicate payments through multi-payment vehicles. Others noted the controls used in their companies were not foolproof.
Here’s look at why some controls don’t work:
Other StrategiesPreventing duplicate payments due to the use of multiple-payment vehicles is reliant on the general set of best practices used to stop the duplicates in addition to some specialized checking. Strong master vendor file controls, coding standards and appropriate segregation of duties are still the foundation of any program designed to make only appropriate payments and only once.
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