Payment recovery is a process for resolving payment errors and recovering funds erroneously paid out. Large companies can take substantial losses in accidental duplicate payments, overpayments, and misdirected payments. These firms rely on payment recovery to make good on as many losses as possible. Smaller firms can also benefit, although they may rely on a specialty firm for this service rather than chasing down lost funds on their own.
Erroneous payments can occur for a variety of reasons. An automated payment system might make a double payment, or not understand that a duplicate invoice is a mistake, and pay on the second invoice as well as the first. Payments may go to the wrong party, in which case the company has to pay the correct payee and recover the funds sent to the wrong place. Overpayments can occur in many settings, or a company may pay out funds on a deposit and never get them back or receive a credit.
In payment recovery, a technician searches for all these erroneous payments and takes steps to recover them. This can include ordering the return of funds, asking for credit to use against future payments, or placing liens to make it impossible to sell or transfer assets until the problem is resolved. Payment recovery specialists may focus on this all day, while in smaller companies a member of the accounting staff may be responsible for this and a variety of other tasks.
There are some special examples of payment recovery consumers may encounter. One is subrogation, a tactic used by insurance companies to recover funds they pay out in cases when an accident is another party's fault. The insurance company will file a claim against another insurance company to cover whatever it paid out, as well as the customer's deductible. Insurance companies use subrogation to make sure the right party pays for negligence and at-fault accidents.
This work can require patience and persistence. Recipients of erroneous payments may be reluctant to give them back, even if they were clearly received in error. Sometimes it is necessary to file suit or use aggressive collection tactics. Overall losses from unrecovered payments can vary but may be extremely high. This is an especially big problem with government agencies in emergencies, as they may pay out substantial sums to deal with the situation, and have to spend months or years recovering bad payments once the crisis ends.
Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.