One of the primary reasons for duplicate payments in Accounts Payable is the lack of right information stored at a centralized location. Having a master data portal with Vendor Master Data (VMD) reduces data inaccuracies and account delinquencies. By ensuring all the product detail, service level agreements, quality standards, delivery timelines, and payment information details in a single place, errors are significantly reduced in Accounts Payable.
However, a businesses that leverage a master data portal too experiences duplicate payments which is a major menace in Accounts Payable. If you are one of them then this blog is for you. Today, with the inputs of our Accounts Payable experts at Outsourced Bookkeeping we provide you with a 5-step guide to avoid duplicate payments in your AP process: Read on:
Regularly Review, Consolidate & Validate VMD: On an average 30% of the duplicate payments happen due to erroneous Vendor Master Data which often is the origin of duplicate vendors. A faulty VMD in addition to posing the risk of duplicate payments also causes payment issues, results in lost cycle time, and money and also strains vendor relationships.
So the first step any business can take to curtail duplicate payments is to review and scrub the VMD thoroughly. If your VMD is voluminous and extensive you can start with a list of highly infrequent suppliers for faster verification and checks. Thoroughly verify the VMD to cut down the irrelevant information and deactivate the duplicate vendors. We suggest a business review and scrubbing the VMD at least once a year to ensure cleaner data. Businesses can also take help from remote accounting firms and outsource the data review process for them.
Ensure Consistent Data Standards: While scrubbing is one part of master data management and another primary aspect of vendor data management is to create consistent data standards. Create a set of rules for payments and invoicing and ensure the same consistency is maintained across the VMD.
For example, set standard data labels for a different type of vendor information. Ensure consistency by creating data entry standards for dashed, spaces, leading zeroes, capitalization, special characters and alpha-numeric characters. At Outsourced Bookkeeping, we maintain standard documents and provide a refresher for new employees to reinforce the fundamentals when it comes to Vendor Data Management.
Request W9s and Verify Tax Information: Always ask for W9 forms from your vendors before the start of every business relationship as this will help you verify Tax Identification Numbers and other required information while filing corporate taxes. One can contact the taxation department and match the TIN of the vendor with the government’s tools for double verification.
Separation of duties & Background verification: Maintaining an accurate VMD ensuring data consistencies, and verifying tax information is not enough to reduce or eliminate duplicate payments. For example, making a single person responsible for everything related to vendor payment is never a good idea. Always bifurcate the responsibilities carried out by your AP resources to minimize the risk of fraud in AP.
Perform a mandatory background verification of your vendor before adjoining them to your lists and making payments. Comb the government watchlists, and know their financial standing to know their legitimacy before proceeding further.
Regular training of AP staff: Track inconsistencies in payables like purchase order inconsistencies, multiple addresses, high volume of invoices, vendors with similar names, and inconsistent invoices. Even better if you can consistently train your AP resources to identify the red flags effectively before processing further in your payable process.
That said, adopting all the AP best practices to reduce fraud or eliminate discrepancies could be a lot for an AP department to carry especially if they are limited by AP resources. This is when a business can reach out and seek help from remote accounting firms that specialize in Accounts Payable Services.
How Outsourced Bookkeeping can help?
At Outsourced Bookkeeping, as a part of our outsourced Accounts Payable Services, we start with a thorough audit of the VMD to rake out data inconsistencies, anomalies, and unusual patterns and guide through standardization of data format for optimal Master Data Management. Our AP experts under the guidance of our CPAs make use of cutting–edge infrastructure to identify the red flags to ensure a secure Accounts Payable.
Our full-scale AP department can work hand-in-glove with your business to build a streamlined and secured Accounts Payable process for consistent cash flow in-line with your business goals. Or we can also lend assistance to your AP department to fill in the gaps and further optimise your AP process for you. For our Outsourced Accounts Payable Services you can contact us at: https://outsourcedbookeeping.com/