Where Manufacturers Usually Overpay AP – And How to Find It

1. Duplicate and erroneous payments

High invoice volume, vendor changes, and manual workarounds make duplicate payments common.

• Same invoice paid twice under slightly different numbers or dates.​

• Credit memos not applied, so customers pay full amounts they don’t owe.​

Ways to find them:

• Run duplicate‑logic tests across invoice number, vendor, amount, and date (not just exact matches).​

• Reconcile vendor statements to AP ledgers to surface unapplied credits and mismatches.​

2. Freight and logistics overcharges

Freight is a classic leakage area for manufacturers because charges can be complex and spread across many invoices.​

Common issues:

• Minimum charges or accessorial fees billed outside agreed terms.

• Fuel surcharges not aligned with contract or market indices.

Ways to find them:

• Compare freight line items to contracted rate tables and routing guides.​

• Segment freight by carrier, lane, and plant to spot outliers in cost per unit or per shipment.​

3. Missed rebates and volume discounts

Manufacturers often negotiate rebates, tiered discounts, or marketing funds with key suppliers, but tracking and claiming them is complex.​

Common issues:

• Not crossing volume thresholds in vendor systems even though actual purchases qualify.

• Rebate calculations based on incomplete or mis‑coded spend data.

Ways to find them:

• Rebuild purchase volumes by vendor and category from AP and PO data, then compare against contract tiers.​

• Reconcile vendor‑reported rebate statements to your own volumes to identify under‑paid amounts.

4. Sales & use tax overpayments

Manufacturers frequently overpay sales & use tax on equipment, repair parts, and plant utilities because exemption rules are complex and vary by state.​

Common issues:

• Tax charged on exempt manufacturing equipment and components.​

• Utilities fully taxed even when part of the usage qualifies for production exemptions.​

Ways to find them:

• Review a sample of high‑value equipment and utility invoices against state rules and exemption certificates.​

• Commission or perform “utility studies” to split taxable vs exempt usage.​

5. How to start an AP recovery review

Manufacturers don’t need to overhaul everything to start recovering cash.

• Focus on 3–4 years of AP, freight, and key vendor data from your ERP.​

• Prioritize a handful of high‑impact tests first: duplicates, unapplied credits, freight anomalies, and obvious tax overpayments.​

A structured recovery audit can often recover 1–3% of audited spend, while also showing exactly which processes and controls to improve