Double payments – Five reasons why they occur

Incorrect payments of supplier invoices occur in virtually all companies and organizations. In some cases, the supplier discovers this and corrects the incorrect payment, but far from all do so. Below, we list the five most common reasons why double payments occur.

1. The supplier uses factoring companies

An existing supplier starts using a factoring company, but payments are still made to the supplier's bank account. As a result, a payment reminder is sent from the factoring company, which is also paid. The financial system does not issue a warning because there are two different supplier IDs.

2. Duplicate supplier ID

A supplier is registered with two supplier IDs. The same invoice number in combination with different supplier IDs is considered by the financial system to be a unique payment, even though it is the same invoice that is paid twice.

3. Incorrectly interpreted payment reference

Payment references can consist of letters and characters combined with numbers. In these cases, the interpretation of the payment reference is sometimes incorrect, with only part of the payment reference being interpreted. If, for some reason, the invoice is re-entered into the system, there is a high risk that the interpretation software will interpret the payment reference differently. This results in two unique payment references that the financial system allows through without warning.

4. Deviating value interpreted as payment reference

When interpreting a supplier invoice, payment references are sometimes misinterpreted. Order numbers, customer numbers, and OCR numbers are examples that can be interpreted as payment references. If the invoice is reprocessed with the correct payment reference, these are seen as different invoices in the financial system and go through without warning.

5. Scanned and e-invoices

Duplicate invoices are sent by the supplier. The supplier sends both a paper invoice and an e-invoice. It is not uncommon for the invoice numbers to differ, and there is a high risk that both invoices will be paid.

Payment for the same goods/services is made by two different companies within the group.

Another reason for double payments is that the group pays the same invoice from two of its subsidiaries. Even though the supplier, amount, and payment reference are the same, the business system only checks for duplicates within the specific company.

About the author

Mathias Grahn has worked with transaction analyses for over 10 years and summarizes here the most common causes of double payments.

Are you interested in finding out what incorrect payments your company has made over the past 12 months? Betalkontroll™ is currently offering a free analysis of your payment history, which includes identifying any duplicate payments that have been made.