Overpayments are a hidden cost in many organizations—AI has the potential to reduce these errors significantly.

Following are some real-world examples of how overpayments can occur, even in highly automated environments. These scenarios show where manual errors, outdated processes, or overlooked system limitations can lead to significant financial losses.

Missed floorstock protection on goods-in-transit

In fast-moving industries like consumer electronics, suppliers frequently lower prices. When this happens, distributors are often entitled to reimbursement for the inventory they hold at the old, higher price—a process called floorstock protection.

While software systems are used to automate these claims, errors can still occur. For example, when goods are purchased just before a price drop but haven’t yet arrived at the warehouse, the system might not count them as on-hand inventory. As a result, distributors miss out on reimbursement for those in-transit items—potentially losing millions in high-volume operations.

Bonus: If the price drop is entered into the system late, eligible reimbursements may not be claimed at all.

Missed promotion on family items

Suppliers often provide temporary promotions (or “deals”) that reduce the cost of goods during a specific time window. These deals often apply to all family items—different varieties or flavors of a product.

To claim the discount, purchase order systems must match the deal terms to incoming invoices. This requires accurate manual entry. If a buyer reuses an old deal sheet and a supplier has introduced a new item in the product family, that item may be excluded from the discount—even though it qualifies. These clerical oversights mean the distributor pays more than necessary.

Payment to wrong vendor

Distributors identify vendors using internal ID numbers that aren’t known outside their system. However, invoices from suppliers typically only include names, not these internal IDs.

When multiple vendors have similar names, accounts payable staff may send payment to the wrong company. If that vendor deposits the check instead of returning it, the rightful vendor will eventually ask for their payment—leading to the same invoice being paid twice.

Because the transactions use different vendor IDs, the system doesn’t recognize this as a duplicate.

Duplicate payments

To close out revenue near year-end, some suppliers manually create invoices to expedite payment before automated ones are processed. These manual invoices may use slightly different numbers than those generated by the system.

If the original invoice is forgotten and the automated one is still sent, the client may unknowingly pay both, because the invoice numbers are not exact duplicates and may cross fiscal years. This makes such errors especially hard to detect with traditional systems.