Paying Suppliers Twice - How Simple Typing Errors Waste Billions Of Dollars A Year

Public and private sector businesses waste huge amounts of money each year by paying supplier invoices twice. This is often the result of simple typing errors where a clerk enters an invoice number incorrectly and the systems don't spot that it's a duplicate. An effective duplicate payment strategy can reduce these losses to a minimum, but very many companies don't take the problem seriously enough.

Simple typographical errors are causing public and private sector organisations to waste huge amounts of money by accidentally paying supplier invoices twice, according to a new report from ConroyAutomation.com, a UK-based financial consultancy. The report, "Are You Paying Your Bills Twice?", claims that UK finance executives are far behind their US counterparts in addressing this issue, in both the public and private sectors.

"This problem is far more severe than most senior finance staff believe", says Simon Conroy, the report's author. He points to a recent study by the US Institute of Management and Administration which found over 7% of large companies double-paying more than 1 in every 200 invoices.

At those rates, a company, institution or government department with an annual budget of $250m could have wasted up to $6m over a five year period. Duplicate payments are detectable and, usually, recoverable. But, the report claims, little attention is paid to the problem, and so shareholders, taxpayers and pension fund investors end up losing.

Public sector agencies in the US are forced by law to identify and recover these erroneous payments, saving millions for US taxpayers. A May 2002 audit report found that NASA had paid a contractor twice because a clerk had typed a letter "O" instead of the digit zero. Normal financial controls fail to spot such errors, and so duplicate payments occur.

In the US there is also a well developed duplicate payment auditing industry, but, according to the report, companies in the UK have been slow to react to this issue. "Because many finance managers don't believe duplicate payment is a big problem, they dont realise how much it is costing them", claims Conroy.

The free report, available on the website www.conroyautomation.com, gives practical advice on how organisations can reduce their exposure to this risk and recover past losses. The report recommends that, once exhaustive internal audits have been performed, finance managers should set private sector specialists to work. These firms charge a percentage of the amounts they recover -- effectively a self-financing service. The report also recommends that organisations set up processes to prevent future accidental duplicate payments before they occur.