1. A RI BA K N OW L ED G E N UG G ET S
P2P: M I N I M I Z E D U P L I C AT E PAY M E N T S
As purchasing systems evolve and offer more process flexibility and expanded payment options, it
is imperative that procedures be re-engineered to eliminate weaknesses that allow duplicate
payments. The extent of the problem of over payment varies across companies and industries.
However, it has been estimated that as much as 1% of all corporate remittances are duplicate or
inaccurate payments.
In the past, bills were paid with one process; upon receiving an invoice, and after validating it
against the authorizing document (purchase orders, contract, etc) remittance is sent via a check.
This process with fewer possible payment venues was easier to audit for duplicate payments; but
no less prone to duplicate payments than modern systems. With all the new payment and invoice
delivery options now available, every company needs to be concerned about:
• Payments being made twice using two different payment types
• Professionals in numerous departments making payments without a formal
process intended to avoid duplicate payments
• Unscrupulous employees or vendors taking advantage of the increased "opportunities"
to hide a duplicate payment.
Items that should be considered when establishing data entry
standards for entering an invoice number are:
• Are leading zeros entered?
• Are non alpha-numeric characters entered?
• What should be entered if there is no invoice number?
• What format is used to enter dates?
• What should the invoice number be if there is only an account number?
• What should be entered if the invoice number is longer than the allotted space within
the field?

2. Many companies are moving to OCR (Optical Character Recognition) software which scans
the invoice and pulls off the vendor, invoice number, invoice date and amount. If you are
using OCR technology, be sure that your manual data entry standards for entering an invoice
are aligned with your OCR technology. For example, if an invoice number is 000482, most
OCR solutions will read in all of the digits, i.e. 000482, as the invoice number. If your manual
process is not to enter leading zeros then you will entered the invoice as 482; causing a
duplicate payment.
Invoices without invoice numbers are another source of duplicate payments. A standard
process for creating an invoice number where one does not exist should create the same
unique number no matter who uses the strategy. For example; Supplier Number plus invoice
date creates will create the same number no matter who processes this invoice.
D.I.Y (DO IT YOURSELF)
There are service providers that offer for a fee rule driven data analyses that trap possible duplicate
or over payments. These services are priced either as a fixed cost or for a portion of recovered
funds. It is claimed, plausibly, that these efforts are successful in recovering funds disbursed in
error. However, we do not recommend this approach for several reasons:
• Transaction analyses based on rules are never 100% effective. Heuristic processes
are by their nature iterative; and require time and diligence for the process
effectiveness to improve to an acceptable return.
• Paying a portion of recovered funds does limit the cost of recovery to less than the
total funds recovered; but there is often a fixed startup cost for this service.
• Capturing funds after the fact ignores the loss of availability of that cash for the period
before the disbursement was caught.
We believe that the better approach to the problem of duplicate or erroneous remittances is a
combination of: proactive data configuration; formal process controls; and reporting created to
support continuous process audits. This approach has 4 advantages:
1. There are virtually no fixed costs to implement
2. Cost of the additional controls are minimal
3. Most errors are captured before payments are released, and
4. Internal audits add no additional cost to recovery
Should you realize that some of your current, or planned, processes are not consistent with the
recommendations that follow, it does not mean that you have rampant duplicate payments. It is
intended as a checklist to ensure you have done your best to provide the process controls to
minimize payment error. And that you have established the necessary reporting for effective and
frequent audit of disbursements.

3. BEST PRACTICES
Actively audit for duplicate payments
• Consolidate data from as many payables sources as possible
Before any effective audit can be performed, access to all the relevant
data is required. Consolidating data from as many resources as possible
to a single reporting system will make audits efficient so that they can be
done frequently. Software, such as Ariba Analysis, provides an analytic
engine capable of reporting and comparing data across multiple data
sources.
• Create a formal process to audit for duplicate payments
If your volume of transactions is large enough, consider establishing an
internal audit position that reviews for duplicate payments.
• Focus the audits on the areas of best opportunity for duplicate payments
Auditing should be focused on large dollar invoices and high volume
suppliers. When it comes to duplicate payments, not all transactions or
suppliers provide similar opportunity for funds recovery. Develop some
extra checking routines around large volume or high cost invoices to be
completely certain a duplicate payment is not being made.
• Check T&E sources for possible payments that might have been invoiced
Occasionally an employee will pay for something with a personal credit
card (or cash) and request compensation on their T&E expense
reimbursement report. Employees sometimes request reimbursements on
the expense report and then submit an invoice for payment. T&E data
sources should be included in any consolidated reporting database.
Need a little help?
Work with your Customer Success Manager and
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4. BEST PRACTICES
Segregate Suppliers with Differing Payment Methods
It is recommended that supplier processing be segregated by payment type. Suppliers
should be set up with a separate post office box, email address, and Fax numbers for those
vendors who you pay with credit or purchasing cards. Invoices sent to either location can be
checked against credit card statements to ensure payment is made only once. Suppliers who
have more than one payment method should have more than one supplier ID; each
corresponding to the one of the different payment methods. These suppliers should have
different contact information, but should have the same supplier parent for reporting
purposes.
Consistent Business Processes Per Supplier
The trend is for companies to no longer enter invoices manually. The internet has made it
easy for companies to use electronic invoicing solutions and other electronic means of
transferring invoices. If a supplier is set up to process invoices via the Ariba Supplier Network
(ASN), be sure that all invoices for that supplier go through the ASN.
Key data elements, such as the suppliers invoice number, must be unique. The uniqueness
of that number is a first line of defense against a duplicate payment when an invoice is sent
both manually and electronically. Because of this, duplicate payments will slip through if there
is no check for duplicate invoice numbers. Ariba’s P2P application requires that the
combination of Supplier ID and Invoice number be unique for this reason.
Formalize Procurement & Credit Card Procedures
Credit card companies are pushing organizations to use procurement cards in their
purchasing. Historically, company issued procurement cards were reserved for low dollar
items but that is no longer the case. It is not uncommon for a company to require that all
purchases under $10,000 be paid through a credit card. As the use of credit cards increases,
we have seen a rise in the number of duplicate payments made where the item was paid via a
credit card and then mistakenly pay the invoice sent by the supplier. If you are going to use a
credit card for a supplier, be sure that every transaction for that supplier is placed on the
credit card. Develop reports to determine which suppliers you have purchased items both on
procurement card and manual invoice. This report should be reviewed and audited on a
monthly basis.
Credit card electronic data feeds can be invaluable in capturing credit card payments before
an invoice can be paid in error. These feeds can be sent as frequently as nightly; and the
Level 2 and 3 charge formats can include invoice numbers. Issuing a purchasing card
number should be coupled with the provision that an invoice number is required from the
vendor on the credit or purchasing card transaction record. It is also possible to add the
Purchasing Order number to the variable data length field in the card transaction feed.
It is often not possible to capture these numbers from the supplier; if so then purchasing cards
should be limited to low value, less frequent supplier purchases so that the impact of
duplicate payments can be lessened.
Separate the Purchase Order Processing from Receiving
Enforcing receiving prevents duplicate invoices by intercepting the over payment as an over
receipt of goods. It is imperative that whoever makes the payment takes all the steps normally
taken by in accounts payable. This means using the same rigid coding standards and
distinguishing between the purchase orders (requester) and receiving documents
(the re ceiver).

5. COMING IN PART II
Process Standards for minimizing duplicate payments
Establishing formal processing standards
• Accounts Payable should own the invoicing process
• Pay extra attention to past due invoices
• Require the supplier to identify the payment method on invoices
• Minimize check requests
• Pay invoices on time
• Require requisitions for all but the smallest expenses
• Create and train personnel on data entry standards
• Worksheet spreadsheet should be based on a standardized template to
prevent data error
• Perform regular maintenance on the vendor master
***Content for this Knowledge Nugget was contributed by David L. Brooks II , Ariba Technical Consultant