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Your Accounts Payable department probably uses a nice software system that is packed full of features to prevent duplicate payments and other payment errors. However, the effectiveness of AP software systems is reduced when the software allows an invoice to be paid under two different vendor numbers — even if they have the same invoice header information.
AP Software Systems Can’t Distinguish Human Error
We’ve seen it time and again. Issues with your ERP system arise, only to find out that human error or improper data entry lead to lost funds. Your AP software systems are only as smart as your staff. Recently, we worked with a health system that found this out the hard way.
During our Discovery Review, TAG identified 90 claims for duplicate payments — even though the AP software system had features to prevent these errors. In 29 instances, a vendor had multiple vendor numbers, which confused the ERP system, allowing the duplicate payment to be processed.
Our recent client had two vendor numbers in their PeopleSoft system for Johnson & Johnson under two different names — “Johnson and Johnson Healthcare Systems” and “Johnson and Johnson Health Care System 1.” This duplicate vendor name leads to a duplicate payment on an invoice for $45,524.
This was a common issue for our client. We found another duplicate vendor name for Greenberg Traurig LLP, one of which was misspelled. Consequently, a $14,994 invoice was paid twice.
This is why it is crucial for health system Accounts Payable departments to keep a clean vendor master.
TAG’s Tips for Vendor Management in AP Software Systems
If these issues sound all too familiar to your organization, it might be time for a vendor master optimization. Follow our tips below to keep your AP software systems filled with clean data and avoid duplicate payments:
- Management should continue to periodically review the Vendor Master file for unnecessary duplicate vendor numbers
- Instruct the IT department to create a report of vendor number with no activity in the last two years, and review unused vendor numbers made inactive
- Continue to educate your AP staff on your ERP system’s criteria for accepting or rejecting a duplicate payment
If you’re not sure where to start, give us a call! We’ve helped hospitals and health systems across the country recover millions of lost funds, and helped to improve processes to avoid future overpayments.