Are Duplicate Payment Errors Disrupting Current Cash Flow?

Imagine growth opportunities — like launching a new product or upgrading equipment to speed up production — being put on hold because current cash flow is disrupted by a $500,000 duplicate payment your AP team now has to manually recover. Consider the cost, time, and burden involved in this process.

What if you could have prevented that payment error from ever happening?

Most organizations believe their ERPs or AP automation systems are set up to prevent all payment errors, yet data shows businesses lose 0.05% to 0.1% of total spend to duplicate payments. The bottom line?

If your team still spends time on recoveries or issuing supplier refunds, that's not prevention. It's time spent trying to recover working capital that should have never left your bank account in the first place.

The Illusion of Control: The Cracks In Your AP Process

Payment errors are usually seen as a necessary evil. But we’ve found that errors are rarely the problem. It’s the assumption that current AP controls can prevent duplicate payments, that is.

Despite the growth of automation, our experience has shown that organizations still struggle with financial leakage in the payables process. That's because automation doesn’t solve payment errors. It only reduces them.

Automation also adds more noise to AP processes depending on the scale and complexity of your operations. We’ve seen new efficiencies often offset by new opportunities for payment errors to enter the process because the AP team didn’t account for them during the initial setup.

So, what is the biggest contributor? The belief that current controls eliminate all payment errors.  

Regardless of an organization’s size, a manual component to supplier payments always exists. While smaller organizations are typically more at risk due to their heavy reliance on manual processes, smaller teams, and invoice processing volume, larger organizations face the same issues but at a more nuanced level.

Where Supplier Payment Errors Begin

For one, supplier invoices have several entry points in an enterprise environment. AP teams can be loading spreadsheets with vast amounts of invoice data into your ERP. Payment automation software can be extracting them from emails. And suppliers can be submitting invoices directly to the ERP via EDI.

Sure, ERP automations with two and three-way processing capabilities can curtail the number of payment errors generated. But if any of the entry points fail — due to formatting, mapping issues, or multiple submissions — your AP team has to manually fix them, introducing errors.

Exception reports can always be run to rectify errors post payment. Yet manually reviewing them is time consuming and error prone. Rule-based exception reports often generate false positives that tax a burdened team with reviewing transactions that are actually fine, leading AP teams to miss the ones that aren’t.

Even the payment errors identified manually post payment still require time and effort to recover funds post payment. With so much to do and a team already stretched thin, is this really how AP should spend its time?

The Cost of “Good Enough”

One error is easy to disregard. But when you’re processing 20,000+ invoices a day, can your organization take on the impact, much less the financial risk, of compounding payment mistakes at scale? Does the business have 3-6 months to dedicate to clawing back payments that could be used to invest in other growth areas?

It's not uncommon for finance leaders to overlook payment errors when top-line growth is the only KPI receiving visibility. However, they do more than slow AP teams down with disputes and inquiries. Payment errors put your margins, supply chain continuity, and current cash flow at risk.

Let us show you how.

Your supplier network is key to driving growth. The goods and services they provide keep operations running and can facilitate entry into new markets. But if every supplier interaction is tied up with disputes or delayed payments, it can lead to business loss. In fact, 80% of executives lose business from payment errors.

Reputation is another concern. Suppliers can share their experiences with others, making it difficult to build new partnerships. With a smaller network, securing raw materials or services can be difficult, impacting your supply chain and customer trust if you cannot meet demand.

There’s also the prospect of incurring financial penalties and fines for non-compliance, further squeezing margins and eroding investor confidence. With supply chains tight, the market outlook uncertain, and cash flow instrumental to navigating uncertainty, “good enough” may cost more than you think.

What Duplicate Payment Error Prevention Really Looks Like: The FlexTrap Advantage

Driving growth is just as much about increasing revenue as protecting it. In our 20 years of helping companies recover funds, we found that true payment error prevention is only possible when you have clarity around your AP controls and processes.

It's this insight, combined with our experience and forensic approach, that led to the creation of FlexTrap: our AI-powered payment error prevention solution. It works as an extra layer of protection that closes the gaps your ERPs and AP automation software can't see, addressing the root cause behind erroneous payments.

FlexTrap works by ingesting and analyzing historical payment data against invoices set for payment. Then machine learning (ML), built on the use cases we've seen, applies pattern recognition, amount variability, and smart filtering to identify and flag erroneous payments.

Since the noise of false positives is significantly reduced, AP teams can shift their focus to resolving actual payment errors. As the team fixes them, ML learns from the correction to further enhance its error-prevention capabilities, providing continuous improvement as your business grows and scales.

So instead of your AP team reviewing 500 flagged transactions per week, for example, they only have to focus on the actual 20 that are legitimate concerns. One of our clients, a national food grocer processing 30,000 invoices daily, leveraged FlexTrap's AI-powered filtering to review only 5-10 flagged issues per day.

This is just one story. We have seven other FlexTrap use cases you can read here.

In an environment where finance leaders are pushing for faster closes and fewer exceptions, preventing duplicate payments is how AP protects the business. Let us show you how.