Managing Overpayments
Why Every Company Needs to Identify and Manage Overpayments
In a European credit managers survey roughly sixty percent of credit managers stated that they had no formal policy for identifying and handling overpayments and if overpayments were identified they were posted to a suspense account. In part, this was due to the fact that our payment systems and our suppliers creditor systems are not sophisticated enough to track modern complex procurement arrangements. These overpayments can result in multi-million losses for many organisations. Current regulatory requirements require that we understand what is happening to our business at a granular level.
Often it is not cost effective to implement a zero error policy in our payment functions but implementing the right overpayment strategy can help obtain the balance between operational and post transaction controls and save your company substantial sums in the process. In implementing the right strategy you will improve controls, reduce error, improve throughput and avoid paying third party audit recovery fees.
An overpayment strategy should include the following key strategic objectives – Appropriate operational controls, post transaction detection, follow-up and recovery and the implementation of procedures for continued improvement
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