What is a Duplicate Payment?

A duplicate payment is an additional payment made to a supplier that has already been paid. When these additional payments are for smaller amounts, they may be difficult to detect, resulting in a permanent increase in your expenses and a related cash outflow. A duplicate payment for a larger amount is generally relatively easy to spot, but can require a substantial amount of work to retrieve from the recipient.

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.

What Causes a Duplicate Payment?

Duplicate payments are caused by flaws in an entity's accounts payable processes that do not detect the presence of prior payments. For example, the payables software should automatically detect a supplier invoice number for which a payment has already been made. The most common case in which duplicate payments occur is when a supplier invoice does not contain an identifying invoice number (as is frequently the case with periodic billings).

How to Avoid Duplicate Payments

There are several best practices that can be used to avoid making duplicate payments to other parties. They are as follows:

Install software that tracks supplier invoice numbers, and flags invoice numbers that have already been submitted.
Check for duplicate suppliers. You might have set up multiple vendor records in your payables system for the same supplier. If so, consolidate them.
Avoid making rush payments. When someone demands a rush payment, it is easier to avoid the normal controls that are in place to avoid making duplicate payments.
Set up a centralized payables group for all subsidiaries of the company. This results in a central repository of supplier information, making it easier to spot duplicate payments.