Most of my company's customers, even the White House and the Pentagon, pay us with credit cards. But we do allow school systems to pay us in 30 days.
Strangely, every year we get five to ten thousand dollars in checks paying for purchases that were already paid for with plastic.
The trend seems to be increasing. It happened three times last week alone, and the redundant payments come from a wide range of customers including small businesses, blue chips and government agencies -- who should have sophisticated accounting systems to avoid double paying. The problem seems to be caused by bookkeepers who mistake paid receipts for invoices requiring payment, and enter them into their systems and then the checks are generated.
We call our customers, explain the situation, have some laughs and shred the checks. But I have to wonder how many busineses are not as honest -- or are just not as careful -- as we are. At a time when profits are elusive and many businesses are slipping into Chapter 11, double payments could be wasting millions, or even billions.
It's impossible to know the total amount of the waste. For some companies on both sides of the sloppy check processing, it could mean the difference between profit and loss.
In addition to the wasted money of the double payments that are not caught, there's the cost of time wasted generating the unnecessary check, and the postage, and the time wasted by the company that received it. I would not be surprised if some companies, especially in this tight economy, quickly deposit every check that comes in and figure that they'll have the use of the money for a few months until the customer notices the error, or maybe keep it forever.
Tell your accounts payable people to pay attention. A receipt is not an invoice!