Duplicate Payments, Overcharges and Returned Goods constitute more than two-thirds of all TAG recovery claims. The lack of a proper vendor tracking program can result in hidden financial waste in a hospital’s procure-to-pay process.

What This Means to Hospitals and Healthcare Systems

If the Vendor Master File is not updated regularly, discrepancies in invoices and Purchase Orders may go approved without researching root causes, leading to overcharges. When vendor mergers or acquisitions occur, duplicate payments are more likely to occur due to duplicate vendor numbers that appear to be separate entities. ERP systems often cannot catch these duplicate payments across multiple vendor numbers even when the invoice number, date and amount all match to a previous payment.

Vendor Tracking Mistakes

Imagine your health system has two active accounts for the same vendor, one for the vendor and one for the vendor’s pharmacy division. The pharmacy division account number was initially chosen and payment was made to it. A week later, another check was sent to the vendor that issued the invoice, leading to a duplicate payment. That, combined with other process breakdowns, creates tens of thousands of dollars in losses when your healthcare system does not post the credit from the duplicate payment back into its accounts.

TAG’s Vendor Tracking Program Tips

To avoid ending up in a similar situation, TAG recommends taking steps to improve your vendor tracking:

Regularly Review the Vendor Master File

• Give only one person in your Accounts Payable department access to review the Vendor Master File to minimize the chance of human error. This person should review the Master File at least twice a year, eliminating duplicate vendor accounts and inactive accounts due to mergers or acquisitions. Train and retrain staff in effective data entry practices and encourage them to report discrepancies they may find on invoices.

Monitor Your Vendors

• Request and review statements from largest vendors for credits and use them as soon as possible to prevent losing credits through oversight or from vendors who arbitrarily “expire” open credits after a certain length of time. Keeping current on vendors’ payment changes helps assures your ERP system has the correct information. Lastly, ensure vendor invoices match Master File data.

The first step to better vendor management is having an effective vendor tracking program. If your accounts payable department struggles with returned goods, overcharges or duplicate payments, give us a call. We’ll work with your team to improve your tracking program and recover more money–all without losing any productivity.