How do duplicate payments happen?
These are some reasons that everyone with hands-on experience in Accounts Payable has likely faced when processing invoices and payments:
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Company environment: Upgrade/change system, Legacy systems, Mergers with companies with different ERP, etc.
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Process breaches: Retrospective Purchase Orders that are created after receiving the invoice, duplicated Vendor Master File entries, Workarounds, Neglected controls, etc.
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Human factor: Low motivated / stressed / inexperienced / temporary staff without proper training, high turnover, etc.
Why can ERP not prevent all duplicates?
Data entry errors (in invoice number, amount or date), payments to duplicated or wrong vendors, cross-currency postings, and other variations will provoke the ERP not flagging the transaction as a duplicate.
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Here are some examples of different scenarios:
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Typos when creating the invoice in the system
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Invoice created to different vendors
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Invoice created with different currencies
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Even combination of problems: Typo/non harmonised invoice number and different vendor
Usual Invoices without PO
Most frequent invoice types that may not require PO or will provoke the creation of a retrospective PO:
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Prepayments
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Consultant or Lawyer fees (billed by the hour/day)
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Memberships and subscriptions
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T&E and other employee reimbursements
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Petty Cash
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Some service bills (Electricity, water, phone, freight, postage, etc.)
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Invoices processed through One Time Vendor account or equivalent