Minimizing payment errors, which can negatively impact an entire company's finances, continues to be a difficult task for accounts payable departments.
The Institute of Management & Administration's AP Benchmarking Survey of more than 450 accounts payable departments found that one-fifth identified error in 4 or more percent of vendor payments. The source also notes that many departments under-report payment errors and that there could be more they are unaware of.
In order to reduce errors, it's important to know the types that occur most frequently, which include duplicate payments, invoices paid for an incorrect amount, not taking discounts, and fraudulent payments.
There are both low- and high-tech solutions to eliminate errors, notes IOMA. Some of the low-tech solutions are cleaning up master vendor files, only paying from original invoices, hiring a third-party recovery audit firm to conduct an annual review, and creating a contract compliance program.
Some technology-based solutions include utilizing duplicate payment audit software and maximizing invoice automation solutions, which enable companies to receive bills electronically.
Recovering old payment errors is a task best suited to a third-party recovery audit firm because most accounts payable departments do not have the resources or skills required, and this can save staff members time that could be spent on other projects.