Payment recovery

Payment recovery firms specialize in getting vendors to return money inadvertently paid to them. In corporate America, this frequently occurs when accounts payable staff accidentally pay a duplicate invoice. Another situation in which this might occur is when, for instance, a company places a deposit on a corporate cell phone account in order to prevent service interruption in the event of a late payment. If the company then switches cell phone providers, it may have difficulty collecting its deposit from the original provider. Accounts receivable staff who handle incoming payments seldom have authority to cut checks themselves, and in any case tend to place a lower priority on returning overpayments than in collecting back payments. Rather than spend time on hold working with vendors, many companies decide to turn the matter over to the experts.

Common techniques

Steps that individuals and businesses can take, include:

1. Pay extra attention to large-dollar invoices. When it comes to duplicate payments, all invoices are definitely not created equal. Develop some extra checking routines around large invoices to be completely certain a duplicate payment is not being made. The definition of large will vary from organization to organization.
2. Pay extra attention to past due invoices. There is a chance they have already been paid, perhaps using an alternate payment vehicle such as a wire transfer or p-card. Develop routines to check that payment hasn’t been made whenever an invoice that is really past due is presented for payment.
3. Vendors who can be paid with multiple payment vehicles also deserve extra attention. Ideally, each vendor should be paid in only one way, i.e. only checks, only p-cards etc. However, in real life, this doesn’t always work. Develop special checking routines for the few vendors that do not adhere to the one payment methodology.
4. Train those making payments outside accounts payable to use the same rigid standards as used inside the department. This especially means that receivers and POs must be extinguished when a wire transfer or ACH payment is made. The lack of this conformity is one of the leading reasons duplicate payments are shooting up again.
5. Employ really good master vendor file practices. This means using the coding standard discussed above as well as regularly cleansing the master vendor file. Ideally, a report should be run of all changes made to the master vendor file each week. This report should be delivered to a senior executive who reviews it. The real purpose of this report is to prevent employees from playing games with the file for fraudulent purposes. However, it also helps keep the master vendor file in check.
6. If your volume of transactions is large enough, consider establishing an internal audit position that reviews for duplicate payments before a third-party audit firm is brought in. This allows you to find the low-hanging fruit yourself and only pay the duplicate payment audit firm for those difficult-to-find items.