Heads: “Paying Bank” Duplicates
Duplicate payments can hit an account at a paying bank at any time causing consumers and businesses alike to be overdrawn or charged extra fees. Bankers hate duplicate transactions because at times they can be held liable for the double posting, and it creates customer dissatisfaction even if the errant item is first deposited at another bank. Most of the duplicate incidences at the paying bank are due to:
- Mistakes where checks are redeposited by a consumer or business
- Fraudulent acts where checks are redeposited by a consumer or business to gain access to 2X – 3X the value of the funds
- Errors in cash letter processing
- Checks that are physically deposited while an electronic payment conversion (i.e. ACH) was also created
- Checks that are deposited via remote deposit capture, then physically deposited
- Duplicate processing within the bank
Tails: Duplicate Payments from Corporations
There is also a category of unintentional duplicate payments generated by corporations’ AP departments where they actually pay invoices more than once. These events, although smaller in number than bank duplicates, can become a major problem for corporations due to the size and scale of their B2B payments. Many businesses still rely on checks, and with thousands of invoices coming in, one might expect a few mistakes. Many of these errors are caused by incorrect entry of invoice data. If an invoice is assigned to the wrong account, or perhaps receives the wrong invoice number, payments can be scheduled without a control to prevent duplicate payment when the second invoice is received. Additionally, there are those companies who resubmit invoices to “test the waters” and see if they can collect twice.
Banks Protecting Customers
Today banks have a wide range of technology advancements to scan through not only checks, but electronic payments to search for duplicates. These systems, although many times not integrated into the standard check processing platform, can run as silos, flagging potential duplicate items. There are many considerations in matching logic, but two major components might be considered most important:
- Tuning capabilities to minimize suspects or false positives
- An optimized suspect review process, potentially integrated into an existing review platform
Certain vendors have also chosen to integrate image analytics into the process in order to clear suspect items and to identify potentially fraudulent transactions within the system.
These solutions have enabled many banks to minimize customer complaints of duplicate transactions.
Examples of Accounts Payable (AP) Strategies
AP software providers have features designed to identify potential duplicate payments including invoice confirmation, audit reports, etc. However, below are several key processes:
- Benchmark frequency of duplicate pays and document resolution for downstream statistical analysis.
- Keep invoice mailings to a minimum. If a payment and bill pass in the mail, the occurrence of duplicates can increase.
- Remove any company that has two profiles in your database. Bills usually get printed in mass quantity based on a master list file. If you notice a customer with two profiles, delete the oldest file.
- Have a set of controls in place to detect check fraud. If you notice that check duplication is happening on a consistent basis, then there might be a cause for concern.
- Train employees to be able to recognize what a duplicate payment looks like. It may have the same amount in the payment field or have a similar date.