There are many ways in which invoicing can go wrong, especially at companies that process invoices manually. Research found that the typical small business pays 450 invoices a month with a 1.29% duplication rate – about six duplicate invoices a month. The average amount on those invoices was $2,034, meaning that these small businesses are losing about $12,000 per month if each duplicate invoice is paid.
Double invoicing, also known as duplicate invoicing, is a big problem for business owners. When your accounts payable team receives the same invoice twice, or two invoices for the same payment, it can cause a host of problems that ultimately impact your bottom line.
Here are some tips for improving your accounting practices to reduce this challenge and avoid wasting valuable time and resources trying to avoid double invoicing.
Double invoicing, or duplicate invoicing, occurs when a business sends duplicate invoices to a customer — i.e., two invoices for the same goods or services provided. Sometimes, the invoices have the same purchase order number, date, and invoice number, making it clear that they were received at least once before. However, in some instances, double invoices are an intentional form of fraud.
Invoice fraud is on the rise, and it comes in many forms — one of which is duplicate invoicing. In a typical invoice fraud scheme, hackers convincingly spoof the email address of a known business partner, like an attorney or vendor and send you an invoice to be paid into the hacker’s account. However, double invoicing is still illegal if a company simply invoices its customers more than it should, leading customers to overpay for goods or services delivered.
Most often, however, double invoicing is unintentional. And, for your accounts payable team, it’s irrelevant whether there’s mal-intent behind it. Your business still loses money, either to a trusted business partner or a cyber attack.
Setting aside the possibility of intentional double invoicing (invoice fraud), there are a number of reasons why double invoicing occurs. Here are just a few ways that double invoicing could be causing issues at your company.
The accounting team needs an easy way to see which invoices have been paid and which are past due. Accounts payable teams need a clear classification system that’s used by everyone to ensure invoices aren’t processed multiple times.
Accounts payable teams must have strict rules about how accounting and billing should verify, approve, and pay invoices. And, in addition to establishing clear rules and procedures, there should be regular training and re-training to make sure all team members are following the rules.
It’s also worthwhile making sure your team has the resources it needs to keep up with accounts payable. Many errors occur when the account team is overwhelmed by the number of payments it has to process. Check to see if you’re understaffed or if there are tools needed to reduce the manual effort required to process invoices.
Double invoicing can also take place when the company uses different payment methods and accounts for various vendors. Typically after a merger or acquisition, the risk for duplicate invoicing is greater. If your organization is big enough to have multiple accounting departments, make sure they’re all using the same centralized software to avoid duplicate payments.
According to one report, 64% of organizations rely on manual processing to detect
duplicate invoice payments. And, despite everyone’s best effort, double invoicing continues to be a persistent problem.
Internally, double invoicing drains company time and resources. Simply trying to avoid duplicate invoicing is demanding for accounts payable, who are simultaneously trying to verify deliverables, manage cash flow, and ensure all invoices are paid on time. Manually checking for duplicate invoices requires all members of the team to be vigilant and organized enough to avoid typos, entry errors, and mistakes classifying invoices every day. When a double invoicing error does occur, it strains the company further to correct and remedy the issue.
Likewise, duplicate invoices are a costly mistake. By some estimates, a typical medium-sized organization loses $300,000 per year because of invoices that are paid twice.
There are also costs associated with trying to remedy an instance of invoice fraud. If you discover that in paying double invoices that you’ve actually been the victim of a fraud attack, it triggers a roster of new expenses: lawyer fees, time spent auditing your payment history, cyber security fees, and resources spent trying to recoup your lost funds.
Ultimately, it's worth investing in a system that helps you avoid double invoicing altogether.
The easiest way to avoid duplicate invoicing is to remove the risk of human error from the process. Implementing an intelligent accounting solution makes it easy to avoid double invoicing while capturing a number of additional benefits.
Today’s intelligent AP software can automate parts of the payment process prone to manual mistakes. With Glean AI's spend management platform, AP teams can stop checking for duplicate invoices and instead rely on analysis to detect spend trends and anomalous pricing changes. Glean AI uses powerful AI technology to flag when a vendor has been overpaid, enabling the accounting team to immediately address and remedy the situation.
In addition, Glean AI can alert users when possible duplicate invoices have been received. Glean AI’s advanced analytics engine studies invoice timing and alerts users to possible instances of double invoicing. It can immediately stop the suspect invoice from being paid and prevent the possibility of invoice fraud. Imagine what your business could accomplish with an additional $12,000 per month recovered from double invoices.
Finally, Glean AI's spend management platform stores all historical invoicing data. In just a few clicks, your team can see copies of past invoices from any vendor. Clear up any confusion about payments without undertaking the time-consuming process of manually searching through different tools, accounts, and emails to see if an invoice was paid.
Take your time back with an intelligent accounting platform like Glean AI. To learn more about invoicing and Glean AI, request a demo today.