While proper invoice handling practices may not be the most interesting topic ever addressed, it is certainly one of the most important. Proper invoice processing is key to creating a plumper bottom-line for those who get it right from the start. Here's why.

What Can Go Wrong

Let's start with the basics. When a company's invoice doesn't get paid on time and 30 days elapse, most organizations send the customer a second invoice. And then another if 60 days go by without payment. A few firms will mark those subsequent invoices as "Duplicate Invoice" or "Copy," many do not. Even if your staff is 100 percent efficient and manages to weed out all those duplicate invoices, it still has to spend precious time identifying which invoices have already been paid and which haven't.

The harsh reality is that some of those duplicate invoices do in fact get paid, but most vendors do not return those duplicate payments. Even when they eventually identify that the payment is duplicate and return the funds, your organization has lost the use of those funds for however long it took the vendor to identify the item. And, to be candid, identifying unapplied cash is not usually a priority for most vendors. Thus, the bottom-line is adversely affected dollar-for-dollar for every duplicate that is not returned.

Better invoice processing procedures would help most organizations avoid this unnecessary debacle.

How to Avoid Duplicate Payments

The following practices will help your organization avoid many problems as well as tighten internal controls surrounding invoice handling.

1. Have all invoices sent to accounts payable first. This gets them into your system quickly.

2. Insist that all invoices reflect either a legitimate PO (purchase order) number or the name of the person who placed the order. Prepare a polite form letter explaining this policy and return all invoices without the requisite information. Send a copy of your form letter with it.

3. Make approving invoices a corporate priority and let approvers understand. If at all possible use e-invoicing and workflow that has automatic escalations included when an invoice has not been approved within a preset number of days, such as five days.

4. Make resolving disputes a priority. Otherwise, as the dispute languishes and payment is not made, a second invoice will be sent.

5. Insist the staff use the same coding standards for all invoices.

6. Develop a convention to generate unique invoice numbers for invoices without numbers and insist your processors use it.

7. Do not allow the staff to monkey around with invoice numbers. Adding a blank space at the end of an invoice number to force the system to accept it, should be prohibited.

8. Do not allow invoices to be hidden in desks. Mandate that all unprocessed invoices be kept in a folder where anyone can find them. This will facilitate responding to vendor inquiries in case the processor is absent. It will also dampen the enthusiasm for losing invoices in the desk.

9. Pay as close to the due date as your cash flow allows. Do not be tempted to pay a little late to earn some extra investment income. Your small gains will pale in comparison to the loss associated with paying some of those invoices twice.

Using these tips will help you keep a closer eye on your invoice processing system and greatly addto your bottom-line. Ka-ching!

Mary S. Schaeffer is the author of over dozen business books including Fraud in Accounts Payable: How to Prevent It to be published in August 2008 by John Wiley & Sons. She serves as the editorial director of Accounts Payable Now & Tomorrow, directs the firm's consulting practice, blogs regularly at http://ap-now.com/blog and writes a free ezine for those interested in payment issues.