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Accounts Receivable Management: How to Identify Duplicate Customers


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Do you want to overpay VAT or corporation tax?


That’s what can happen when there are duplicate customers on your accounts receivable (AR) roster. This often results from not assigning a specific code to each customer, though there are many causes.


Removing and avoiding such duplicate accounts is a vital part of accounts receivable management. In this article, we’ll show you how.



Table of Contents

Introduction: What is Duplication?

When Does Duplication Occur?

Consequences of Duplication in AR

Accounts Receivable Best Practices: Identifying Duplication

Accounts Receivable Management: Handling Overpaid Amounts

Conclusion


Introduction: What is Duplication in Accounts Receivable?


Accounts receivable (AR) is an amount of money your clients owe you for services or goods they bought from you. Typically, this amount is recorded as an asset on your company balance sheet and collected after some weeks.


Duplication is an accounting error. It is the term used for a duplicate accounting entry; that is, it has been credited or debited twice for the same entry.


Often, duplication errors are spotted after accounts receivable reconciliation. When they are identified, the errors should be immediately fixed. If there is no prompt resolution, an investigation into the errors will be launched.


Note that an accounting error, including duplication, should not be confused with accounting fraud, which is a deliberate act to alter or conceal entries. The most common accounting errors are clerical errors or accounting principle errors.


When Does Duplication Occur?


There can be various reasons for duplicate transactions, but they commonly occur in the following instances:

  • Importing documents and transaction lists from different systems

  • System updates

  • Manual introduction of invoices and transactions

  • Entering clients’ names more than once in the system

  • Variations of clients’ names in the system

Consequences of Duplication in AR


Accounts receivable management is just as important as accounts payable management. Potential issues that can result from duplication in accounts receivable include but are not limited to:

  • Overpaying VAT: This can cause cashflow problems in your company.

  • Overstating profit: This can result in faulty decision making (due to false financial information) and extra bonuses being paid, ultimately leading to a deterioration of the business.

  • Overstating due corp. tax: By overstating profits, you will end up paying even more corporation tax than you already are. There may also be a cash flow problem in sales invoices are not paid.

  • Overcharging clients: When was the last time you were happy after receiving an unexpected invoice? Overcharging clients, especially if it’s due to poor accounts receivable management, can sour your relationships with your customers.

Accounts Receivable Best Practices: How to Identify Duplication


Proper accounts receivable management will involve knowing how to identify duplicate customer accounts or invoices. Once you are armed with this knowledge, fixing accounting errors will become easier for your company.


You will find that most errors have to do with entering the same data in different ways. Nonetheless, it is important to know the various ways this can go wrong so you know exactly what to look for.


1. Formatting of Phone Numbers


Often, phone numbers are actually used to identify duplications. This is because contacts with duplicate records will likely have the same phone number, and companies are not prone to changing mainline numbers frequently.


However, since there are many ways to format a phone number in an accounts receivable database, this can cause problems. For example:

  • 9876543210

  • 987-654-3210

  • 987.654.3210

  • (987)-654-3210

And so on.


Phone numbers are also prone to containing typographical errors and other issues, so they may contain incorrect numbers or values.


2. Suffixes and Titles


Varying titles and suffixes can also lead you to miss otherwise obvious duplicate contacts or data. Consider the following examples:

  • Dr. Jane Gray

  • Dr Jane Gray

  • Ms Jane Gray

  • Jane Gray Sr.

  • Jane Gray II

  • Lady Jane Gray

3. Typographical Errors


NASA’s missing hyphen in their coding cost them $18.5 million in 1962 (about $150 million today).


That was for their launch of Mariner 1, a probe bound for Venus. The probe lost control and had to be blown up 293 seconds after launch.


It’s unlikely that a typo will cost you that much – but it can still cost you a lot.


Any time humans are responsible for inputting data, you can expect typos, especially if you’re dealing with a large database. Example of such typos may include the names of companies, such as “Microsift” instead of “Microsoft”, or names, such as “Jom” instead of “Jon”.


4. Differently Expressed Records


Many times, records, terms or names are expressed differently. Say you are using a company name to match duplicate records: that company’s name itself could be expressed differently in different records.


For example, “NextGen” vs “NextGen Accounting”. Another area this can happen is job titles, such as “C.E.O.” in place of “CEO”.


5. Lack of Secondary Checks


Duplicate records can slip through your fingers if you only use set fields without secondary checks.


Let’s say that you identify duplicates through a combination of phone number, first name and last name. In case this fails to identify duplicates, you can input a secondary check, such as postal address, email address, first name and last name.


6. Similar Fields


If you collect data across similar fields, you can expect some duplication to ensue. Let’s take the example of collecting different types of phone numbers for a single customer:

  • Mobile No.

  • Company Phone No.

  • Phone No.

  • Fax No.

Accounts Receivable Management: Handling Overpaid Amounts


There are some ways you can easily manage an overpaid amount:

  • Make a credit & apply to future invoice

  • Make a credit & refund amount

  • Apply to a different, unpaid invoice

  • As a last resort, you can write it off in case it cannot be repaid or adjusted against that customer. (Show it as part of sundry income, on which tax may be payable)

Conclusion


Identifying and fixing duplication comes after accounts receivable reconciliation solutions; avoiding it comes with both a knowledge of duplication and the use of software, including automation software.


If you want to determine whether there’s duplication in your accounts receivable roster, NextGen Accounting’s reconciliation services are just a click away. Our management team has decades of experience and includes former executives of Barclays Bank, Bank of America, and ICBC.


From us, you’ll get reliable documentation every single day. If it doesn’t pass the audit, we’ll pay the fees.


Ready to get rid of the frustrations of both reconciliation and duplication? Contact us now!

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