The high cost of duplicate payments

2011-06-29 00:00

ONE of the greatest sources of financial leakages in businesses is duplicate payments, which can cost a company hundreds of thousands of rand in lost revenues.

So says George Williams of accounting firm Grant Thornton’s business risk services division.

“It is up to a company’s board of directors to implement appropriate internal control processes in order to prevent loss of revenues.

Duplicate payments, which occur within a company’s accounts payable process, may not always be related to fraud, but could occur due to the breakdown of internal controls and billing systems.

Williams says, “It is estimated by the Institute of Internal Auditors that companies make duplicate payments at a rate of between one and two percent of all their payments made … if a firm processes R10 million in payments annually, this would account for between R100 000 and R200 000 in lost revenues.”

Standard internal audit reviews will identify common causes of duplicate payments as a matter of course, while implementing simple data interrogation tools will prevent further duplication.

“In some instances supplier details may be duplicated on the accounts payable system or perhaps there is a lack of coding standards for inputting supplier invoicing information, which leads to the same supplier being paid twice for a single service,” says Williams.

Other instances that result in duplicate payments are:

• Creditor invoices are not paid on time; suppliers may re-invoice and inadvertently receive a double payment from the accounts department

• Human error when a code is typed into the system incorrectly

• A small discrepancy in invoicing information, with all the other information remaining the same, such as when the rand amount is different but the supplier name, reference number and invoice numbers are the same

• Weak control systems within the accounts department. — WR.

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