Avoiding the double payment dilemma

Double paymentEver felt the frustration of learning you paid a bill twice? Have you spent time contacting the vendor, trying to correct the error, and receiving a refund?

How about your customers? Have you been paid twice for an invoice?

Double work is never profitable so let's look at ways of avoiding these scenarios. We'll talk about fixing double payments another time.

Double payments from customers

Alas, with customers, you cannot prevent receiving double payments altogether since you have no control over what they do. However, you can help them avoid double payments. Start with using sequential invoice numbers for each invoice you send out. Don't try to make invoice numbers "intelligent" with dates or jobs or whatever; the database has appropriate fields for that info.

The first and best reason for using sequential numbers is that it eliminates duplicate invoice numbers. Try, just once, to collect a payment from a customer for an invoice whose number they have already paid. You'll never want to risk duplicate numbers again! The next best reason is to differentiate between multiple invoices for the same amount or service on different dates. Such a billing could look like a duplication to a customer but, by using a different date and invoice number, you can show it's not a duplicate. Finally, sequential numbers help eliminate fraud. You don't want employees stealing from you and I'm sure you don't want to steal from the IRS.

Double payments to vendors - Part 1

Alas, there's no excuse for these since you are in complete charge. Nevertheless, stuff happens. Follow these pointers to minimize the chances of overpaying a vendor.

If your vendors are following the good practice of using sequential invoice numbers on bills they send you, then by all means use that to your benefit. For several reasons, I advocate entering bills into your software and then paying the bills rather than simply writing a check. Not the least of the reasons is the topic here: avoiding duplicate payments. During the setup of most software programs, you'll be asked if you want to check for duplicate bill numbers from the same vendor. Answer yes! Then, when you enter a bill, always take advantage of the bill/invoice/reference number field and enter the vendor's invoice number. Additionally, using vendors' reference numbers tells them what you are paying and that keeps both parties' records straight.

TIP: I recommend entering vendors' invoice numbers exactly as they appear on their documents. If that's the rule you follow, then you don't have to wonder if, for example, you entered the leading zeroes or not. This consistency keeps you from paying one bill twice and makes searching for an invoice easier.

Double payments to vendors - Part 2

Read the document received from a vendor well. That seems a bit obvious, but I'm surprised by how often a client will simply pay the amount printed in the lower right area of the bill, even if the amount is noted as being a credit! Now you've paid the bill three times! Read the bill twice; enter bill and pay it once. Don't perpetuate the cycle!
"An ounce of prevention is worth a pound of cure." It's an old saying but every business owner knows the value of it. Prevent double payments and save yourself, and your customers and vendors, time and aggravation.

Need more information on double payments or other business accounting issues? Give us a call. We would love the opportunity to help solve or, better yet, prevent your accounting challenges!

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