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Working in Accounts Payable or Finance, you know it is important to keep your vendors and purchase orders well-organized. This means ensuring that each vendor is identified by a single number. Multiple vendor numbers for a single vendor or partner can cause issues, like duplicate payments.
How AP Software Handles Multiple Vendor Numbers
Many Accounts Payable software systems have control features that exist to prevent the same invoice from being paid twice. However, this software is unable to recognize when a vendor has been added twice under two different vendor numbers.
Because these systems identify the vendor based on the number, it does not recognize if a vendor name is duplicated or similar. Control of the AP software is limited when the same invoice number is paid twice, using two different vendor numbers for the same vendor.
Multiple Vendor Numbers Cause Trouble for Healthcare Systems
A complex healthcare system’s Vendor Master File may contain duplicate entries for one vendor or even contain vendor numbers that are no longer in use. Recently, The Audit Group worked with a large health system to uncover and resolve issues with its Accounts Payable processes, which included a review of the Master Vendor File.
The system paid an invoice in November to vendor number 2519289, titled in the master file as “AMS Locums — Use 2519289.” Two months later, the health system made a second payment for the same invoice to a vendor number 2520758, under vendor name “AMS Locums.”
Due to the variance in the vendor names and the multiple vendor numbers, the AP software was unable to recognize and flag the $7,447.59 duplicate payment.
TAG was able to identify the duplicate payment and recover the lost funds for the health system. Full credit was issued, and a new AP process was put in place to avoid multiple vendor numbers.
TAG’s Tips for Assigning Vendor Numbers
- Link all invoices to detailed Purchase Orders to create audit trails for transactions and reduce the opportunities for duplicate payments.
- Educate staff on Accounts Payable software criteria for accepting or rejecting duplicate payments.
- Create and review a report of vendor numbers with no activity in the last two years. Deactivate unused vendor numbers or merge them as necessary to remove duplications from the same vendor.
If you haven’t taken a look at your Vendor Master File, the time is now. The Audit Group can help you optimize your master file and recover lost funds resulting from duplicate payments or process inefficiencies. Contact our experts in healthcare finance and process engineering to learn more.