Whether by fraud or by error, the payment of duplicate invoices is costing organizations huge amounts of money. Without the proper controls in place, the payment of these invoices can go on without discovery for months, years, or decades. So how much is this costing organizations?
Duplicate Invoice Payments Could Cost Upwards of $12,000 per month for SMBs
According to Concur Invoice data, a typical SMB* processes approximately 450 invoices in a busy month, and experiences an invoice duplication rate of 1.29 percent. With the average duplicate invoice valued around $2,034, organizations who are not paying attention could be losing upwards of $12,000 per month.
Why are organizations falling into a duplicate invoice trap? While there are many, four of the top reasons are manual processes, too much paper, lack of visibility, and an ever-increasing pressure on AP departments to do more in less time.
Manual, Paper Based Processes
Manual processes are not only error prone, they are costly. In addition to the increased risk of paying duplicate invoices, APQC research finds that bottom performing businesses are paying nearly three times as much as top performers.
Highlighted in our blog, The Many Ways that Top Performing Accounts Payable Organizations Drive Savings,
“…of nearly 1,000 organizations’ payables processes, those labeled “bottom performers” are paying $12.77 per invoice processed, compared to a much more manageable $7.75 by median companies and $4.98 per invoice processed by the top performers.”
An invoice hits the mailroom, is identified, sorted, and routed to the appropriate location, where it lands on the desk of the individual in charge of paying the supplier. The same goes for an email: The email must be printed and routed, adding to the mess of paper that already exists and possibly getting lost, buried, or sent to the wrong person, creating the worst possible iteration of “chasing paper” that exists in the modern world.
Overuse of paper in the AP process is so bad, in fact, that according to PayStream Advisors, 52% of procurement and finance professionals said an overreliance on people and paper-based processes was “[…] the biggest barrier to success in improving AP Operations.”
Lack of Visibility
The aforementioned process also lacks visibility. Too often, you will see an approved invoice and send out the check, resulting in an accidental double payment of an invoice. Lack of visibility results in lack of savings capture opportunities, and in turn lost money, as demonstrated by the infographic below:
A Pressure to Do More with Less
If your organization is growing, it means you may be paying additional invoices with the same staff numbers. Piled on with the pains of manual processes, this means finance and AP are spending 49% of their time on transaction processing. Per our blog:
According to APQC, “[…] in an average work week, highly paid finance staffs are spending the equivalent of Monday morning through lunchtime on Wednesday making sure that bills get paid, customers get accurate invoices, general accounting work gets done, and fixed assets are accounted for, among many other tasks that keep the money moving through an organization.”
The Fix: Paperless Automation with Duplicate Invoice Flagging
The Concur study looked not into the amount of money lost, but the amount of money saved by Concur users. Those duplicate invoices are tracked, matched, and flagged to allow customers to configure alerts or automatically halt on processing when duplicate invoices are identified, saving businesses not only a lot of financial headache, but also a bundle of operating dollars.