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  July 25th, 2020 | Written by

What is the Science Behind Payment Errors?

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  • Most accounts payable departments don’t have the luxury devoting a team solely to resolving payment errors.
  • According to our data, suppliers change their bank account information about every four years.
  • Payment errors take up an inordinate amount of AP (and AR) time—about 20-30 minutes total per error.

Payment errors can happen for various reasons. The number gets transposed on a check, or a virtual card is issued but never charged. Sometimes, an ACH payment hits a closed bank account. These kinds of things happen all the time, and even if your error rate is in the single digits when you’re making tens of thousands of payments a year, that’s still a lot of errors.

At Nvoicepay, our error rate is below one percent of payment volume, and that is still enough work to have a two-pizza team dedicated to error resolution.

Most accounts payable departments don’t have the luxury devoting a team solely to resolving payment errors. The payment error process is completely reactive—something that someone has to drop everything to do, while also completing their other work. Because we have teams of specialists in payment modifications, ACH verification, and reconciliation and auditing, we can do this work more efficiently and, at the same time, let our work inform a more proactive approach. This experience enables us to understand common issues and automate our processes. With this practice in place, we have turned reactive procedures into productive ones.

Payment errors take up an inordinate amount of AP (and AR) time—about 20-30 minutes total per error, by our estimate. This is time spent that adds absolutely no value. In fact, it’s a drain on the bottom line. Most accounting departments only have the resources to do the work, not optimize the process. Since payments are all we do, we have the scale to make even small process improvements worthwhile.

A day in the life

Our specialists have seen everything when it comes to payment issues. The payment modifications team is usually alerted to concerns through our customer and supplier support teams. It’s this close interaction between the two teams that makes us successful, and quick to resolve problems. Because our customers are often dealing with the same accounting issues, we’ve got our responses to each scenario down to a science.

Some of the most common payment issues are:

–Funds bounce due to suppliers updating or closing their accounts

–Customers discover clerical errors in the pay file they submitted

–Physical checks get lost in the mail

It’s our deep understanding of common issues that enabled us to develop processes for each, which not only makes them simple for us to resolve, but it keeps these problems out of our customer’s inboxes. For the deeper issues that require more digging, we work with customers to resolve them as soon as possible. In the end, our customers are never left hanging—even when a problem originates from somewhere outside of our system, we support efforts to resolve it, until the payment successfully reaches the supplier or refunds to the customer.

Reconciling and auditing

Our reconciliation and auditing specialists jump in when we need more complex problem solving, specifically around fraud or attempted fraud. A lot of this work involves analyzing ACH update requests because they are the most common payments to be targeted by cybercriminals. Like everyone else, we work to stay one step ahead and do so through careful analysis of supplier information updates.

Many schemes are directed at tricking people into replacing legitimate supplier bank account numbers with fraudulent ones. According to our data, suppliers change their bank account information about every four years, which means accounts payable departments get a lot of update requests. Our customers pass these requests to us, and we analyze and validate each one before making changes. This careful consideration upholds our customer’s supplier relationships and minimizes payment fraud.

We also audit manual payment modifications to make sure that the amounts and actions taken on each payment were correct, per customer instruction. In the case of canceled payments, we ensure they were canceled correctly, and determine whether a refund was initiated for any undercharged amounts. This process identifies potential issues effectively without causing a time strain on any party involved.

These internal audits prepare us for making our annual SOC audit efficient and successful. They are also how we identify inefficient or outdated processes. Once we have an idea of how our processes can be improved, we suggest automation ideas to our engineering team to develop and implement. Nvoicepay thrives on change, and a lot of the ideas for our next evolution begin at the ground level, with those of us resolving these issues on a daily basis.

Nobody likes making errors or admitting they make them, but they are a fact of life when you’re sending payments. There are just too many moving parts for everything to go exactly right all the time. Accounts payable teams devote an enormous amount of time to resolving errors and very little to figure out how to optimize it. The department is a resource-constrained department. It can be difficult to invest time and effort in improving something that no one really wants to admit happens.

Even in the early days of Nvoicepay, payment modification was just another part of tech support. It’s long since been elevated to its own function, in recognition of daily payment errors and the enormous collective drain on resources they represent. While reactively handling errors is not a value-added activity, figuring out how to handle them at scale is. That is what the payment modification team does on behalf of all of our customers.


Deidre is the Payment Modification Lead at Nvoicepay, a FLEETCOR company. She has four years of experience in the B2B payment industry, specializing in payment resolution processes.