The most common accounts payable errors are overpayments, duplicated payments, unused credit notes and unclaimed discounts.
Overpayments are caused by someone processing the wrong payment, this can be avoided by having one person process the invoice and another person checking and approving the payment.
A common error is duplicated invoices which are paid twice, this can happen easily if suppliers send invoices to you in more than one way (for example by email and post) and you accidentally pay both invoices. Another way this happens if when a supplier sends a reminder and you pay the original invoice and the reminder. A good accounts payable system will be able to identify duplicate invoices and is updated in a timely manner so you can check if an invoice is paid.
Before paying invoices it is important to check if you have any outstanding credits from a supplier and deduct this from the invoice before paying the invoice so that you are not overpaying your supplier.
Another common mistake is forgetting to apply a discount that you are entitled to from your supplier. Many suppliers provide discounts for prompt payment or volume discounts, if you are entitled to these it is important to apply the discount prior to making payment.
These errors are caused by human error and poor systems. It is essential that your accounts payable process can minimise these errors.
How to avoid these Errors?
- Have a good accounts payable process in place to reduce the risk of errors.
- Automate the process where possible.
- The system should detect duplicate invoices.
- Require staff to create purchase orders and check the invoice against the purchase order.
- Check pricing on invoices match purchase orders, quotes or standard price lists.
Having a good accounts payable process is essential as it can save you money and improve your cash flow because you are paying your suppliers the correct amount and prevents you from wasting time recovering incorrect payments.
