Vendor Invoices: How to Avoid Billing Errors

Billing Errors Graphic

Written by Ashley Dameron

August 18, 2021

Billing errors on vendor invoices could be costing you thousands of dollars a year.

Between utility bills, insurance, janitorial services, supplies, and other fixed costs related to your business, the amount of vendor contracts and invoicing is overwhelming. It’s hard to manage every detail of every invoice with so many other priorities that need your attention. In fact, most companies don’t even try to audit vendor invoices, they just assume the billing is correct. Here’s why you shouldn’t.

Price Creep

Have you ever noticed how your bill is slightly higher every month? It’s called price creep, a gradual and steady increase of the cost of goods or services, a common practice among vendors. The increase is so slight, you may not notice it at first. Over time, the price becomes higher and higher, despite the agreed upon payment in your initial vendor contract. Even though the increase may be pennies, when you add the increase over time and multiply it by the number of vendors you’re working with, it can amount to hundreds or thousands of dollars a year.


Billing Errors

It’s not uncommon to find errors on your invoice. In fact, 80% of telecom bills contain errors according to Gartner. Data entry mistakes, duplicate invoicing, and digitization can all create errors in a billing invoice leading to overcharges. This is especially true for utility bills as fees are structured with varying rates and account charges. Water, electric, gas, waste, internet, phone, IT services, laundry services, and landscaping companies usually charge tiered rates, creating more opportunity for errors to be overlooked. Take a look at these outrageous vendor billing errors.


Duplicate Charges

For multi-unit companies with a large number of accounts, it’s easy to overlook duplicate charges. If your vendor team is billing multiple accounts under your company name, they can become confused and accidently charge you twice for services. Imagine the amount of money wasted if duplicate charges are added to your invoice every month.


Forgetting to Cancel Services

For vendors whose cancellation processes are manual, employees could overlook your request to terminate services. Continuing to pay for a service you’re not receiving is frustrating and a drain on your finances. Do you have time to audit every invoice to ensure all canceled services have been removed from your bill?


How to Avoid Billing Errors

There is a 98% chance you’re overpaying on vendor invoices. How do you avoid price creep, billing errors, duplicate charges, or vendor oversight? You’ll need to perform regular audits of your vendor invoices. By double checking your bills, you and your team will be able to catch anything that seems suspicious or out of the ordinary.

Hiring a full-time employee to audit fixed cost invoices may help catch errors, but chances are they won’t have the knowledge and expertise to renegotiate contracts with current vendors. Instead, consider partnering with a company who has experience in your industry. This way you can refrain from putting more responsibility on your team, and ensure your vendor relationships remain intact. If you’re working with an outsourcing provider, ask your accounting team about vendor billing error rates. If they’re not tracking billing errors, they should be able to connect you with experts who can reduce these expenses for you.



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