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As we all know, running a healthcare group means working in a fast-paced environment under tight deadlines. At any moment, what you might consider “organized chaos” in the accounts payable department may lead to critical errors in your organization’s billing, such as duplicate vendor payments. Although seemingly minor, these mistakes can add up significantly over time.
How do duplicate vendor payments happen?
Vendor payments may be duplicated when the same vendor is entered into an organization’s billing system multiple times. Normally, the systems will catch two identical payments to an identical vendor, but typos and other errors can mean these payments aren’t exactly identical. For example, if you make a payment to company ABC, but enter it ABD, it’s possible for both the correct and incorrect payments to make their way to company ABC.
Mergers can also have negative impacts on vendor payments. And because vendor mergers happen all the time, healthcare groups are less likely to catch these errors until they become significant. Let’s say you make a payment to company, ABC, but it’s now company XYZ. If you don’t merge those two companies in your billing system perfectly, you face a higher likelihood of paying the same vendor twice.
What’s the real risk of poor vendor maintenance?
Although duplicate payments typically result in a credit applied to your account, your accounts payable department may not be aware of that credit. Vendors don’t typically send statements, instead opting for only invoices. So if you don’t take care of your vendor list, you risk leaving money on the table.
What’s TAG’s approach to vendor maintenance?
Our process is all about identifying those points of confusion and eliminating any opportunity for duplicate payments. Our typical process involves:
- An auto grouping match code that flags anything that looks like a duplicate vendor in the system
- Sorting vendor names alphabetically to identify potential duplicates
- Sorting vendor names by address and tax ID number
- Staying updated on vendor mergers and cross-referencing with your vendor list
When should organizations outsource their vendor maintenance?
We often see clients who say they’ll make time to go through their vendor list on their own, but it rarely gets done. Accounts payable departments are under so much pressure to get every invoice paid that they simply don’t have the bandwidth to catch up and take on an audit like this. Although the process is fairly straightforward, it’s very labor-intensive and detail-oriented. That’s why clients ultimately pick up the phone and call us to take on this work.
Your vendor list may appear to be a minor component of your accounts payable department, but it can be filled with errors that cost you month over month. Start a comprehensive vendor list audit and stop leaving money on the table. Contact The Audit Group today and learn how much you stand to recover by bringing order to your vendor list.