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 can occur for a variety of reasons, often stemming from errors in processes, technology, or human oversight. Below is a list of common reasons for duplicate payments:

Manual entry mistakes. Payment data is entered more than once, such as invoice numbers, amounts, or supplier details.
Approval errors. Copies of the same invoice are approved by multiple individuals who are unaware of prior approvals.
Multiple submission channels. Invoices can be submitted through multiple platforms (e.g., email, paper, and electronic systems).
System accepts duplicate invoice numbers. The accounts payable software fails to flag or reject duplicate invoice numbers.
Duplicate invoices from suppliers. Suppliers unintentionally or deliberately resend the same invoice.
Multiple supplier accounts. The accounts payable system contains more than one account for a supplier, leading to payment confusion.
Overlapping payment cycles. Payments are processed at different times for the same invoice.
Weak validation controls. There are ineffective controls for checking duplicate entries or payments.
Supplier fraud. Vendors deliberately send duplicate invoices to collect multiple payments.
Mismatched payment methods. Payments are being made via different methods (e.g., ACH, check) for the same invoice.

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.