Imaging and Duplicate Payments

We have a client who has been using SAP for many years and has recently implemented a third party imaging and workflow system.  This company was really in need of this system.  The imaging solution uses OCR (optical character recognition) to systematically pull off the invoice number, invoiced date, and amount.  I am a big proponent of implementing imaging and workflow as it greatly increases efficiency in A/P and the entire organization. However, as with any new technology that gets implemented, there are always hiccups.

One of the hiccups for this client was duplicate payments.  This company, like most, maintains strict data entry policies regarding how invoice numbers are entered into their SAP system.  Some of the policies this company had (pre-imaging) were to not enter leading zeros in an invoice number and to not enter spaces in an invoice number.  You might use these and others yourself as they are common data entry practices in the industry.

When the OCR solution scans the invoice number, it pulls the number exactly as it appears on the invoice.  So, if an invoice number looks like this   0001 38343 328445 on the invoice, the OCR system scans and enters the invoice exactly like this “0001 38343 328445”.  Whereas, if an Accounts Payable processor were to enter the same invoice they would enter it like “138343328445”.  They would drop the leading zeros and spaces in the invoice number.

Now you can see what has happened:   invoices numbers were being entered very differently from the OCR solution versus the standard data entry practices.  As you know, SAP (or any ERP system, for that matter) works off of at least four critical invoice fields – invoice date, invoice number, invoice amount, and vendor number, to identify potential duplicate payments.  If the data in any of these fields differs, SAP will not recognize it as a duplicate invoice.  As you can guess, our customer experienced a significant increase in duplicate payments.   What do you think the financial impact of the duplicate payments was?  Through our analysis, our customer identified over $450,000 in duplicate payments made during the implementation of the imaging solution. 

What is the lesson learned?  If you are implementing an imagining solution with OCR, be aware of the risk of duplicate payments and put in the appropriate control measures.  

Thanks for reading and please feel free to share your experience with implementing an imaging and workflow system and its effect on duplicate payments. 

Karl