- Purchase Orders are one of the best controls for preventing duplicate payments.
- A key control feature of a Purchase Order is that it links payments to a specific vendor.
- Incomplete Purchase Orders provide incomplete communication to AP clerks responsible for paying invoices.
- In a recent review of a health system, TAG discovered a total of nine duplicate payments totaling $88,570. None of the duplicate payments recovered during this audit were linked to a PO.
- Two duplicate payments were made to Locums Tenens – one payment was made on 10/1/13 for invoice #LTIN 296455, and was paid again as invoice #LTIN296455 (with no space) on 12/31/13. The system’s ERP software did not prevent the duplicate payment because a PO was not linked to help control the transaction.
- A duplicate payment was made to Koffel Associates when invoice #4043 for $16,500 was paid incorrectly as invoice #443. The following month, it was paid again, using the correct invoice #4043. A Purchase Order was not referenced on either payment.
- POs help organizations reduce the prevalence of duplicate payments.
- Itemized Purchase Orders are always preferred over Blanket Purchase Orders.
- PO’s containing: Item Description, Item Number, Quantity, Unit Price, and other relevant purchasing and payment terms provide the greatest level of security against incorrect vendor payments.
- Because your ERP system will not prevent a duplicate payment if the same invoice is entered inconsistently, it is imperative for hospitals to link as many invoices to POs as possible in order to control the transaction.