10 Common Ways Vendors Overcharge (And How to Catch Them)

Every year, businesses lose billions to vendor overcharges. Most aren't fraud - they're "mistakes" that quietly inflate your costs. Here are the 10 most common tactics and how to catch them.

1. Quiet Price Increases

The Tactic: Vendors gradually increase prices on individual items without notification, hoping you won't notice amidst dozens of line items.

Real Example: A facilities company's HVAC supplier increased filter prices from $12.50 to $14.75 each. Over 240 filters per year, that's $540 in unexpected costs.

How to Catch: Compare every invoice line item against your pricing agreement. ReceiptExtractor does this automatically, flagging any price that doesn't match your contract.

2. Unauthorized Substitutions

The Tactic: Charging premium prices for standard products, or billing for brand-name items while delivering generic alternatives.

Real Example: A restaurant ordered "Grade A eggs" at $3.20/dozen but received standard eggs worth $2.40/dozen. Over a year: $4,160 in overcharges.

How to Catch: Match item codes exactly. Flag when descriptions don't align with codes. Verify unit of measure matches what you ordered.

3. Calculation Errors

The Tactic: "Accidentally" miscalculating line totals, subtotals, or applying incorrect tax rates.

Real Example: 24 units × $45.00 should equal $1,080.00, but invoice shows $1,180.00. That's $100 in a single line item. Multiply across invoices...

How to Catch: Verify that quantity × unit price = line total on every single line. AI can do this in milliseconds while humans miss errors in complex invoices.

4. Expired Contract Pricing

The Tactic: After your pricing agreement expires, vendors charge higher "list prices" without notification, banking on you not tracking contract renewal dates.

Real Example: A contractor's supplier contract expired in December. In January, prices increased 8% across the board - $1,200 extra per month.

How to Catch: Track contract expiration dates. Set reminders 60 days before expiry. Verify invoices against the currently active contract only.

5. Duplicate Charges

The Tactic: Billing for the same item or service twice, either on the same invoice or across multiple invoices.

How to Catch: Cross-reference invoice numbers and dates. Flag suspiciously similar line items. ReceiptExtractor can detect patterns across multiple invoices.

6. Unit of Measure Games

The Tactic: Switching from "per case" pricing to "per unit" or "per foot" to "per yard" without adjusting the price proportionally.

Real Example: Vendor switches from $24.00/case (12 units) to $2.50/unit. Looks similar, but that's $30.00/case - a 25% increase!

How to Catch: Always verify unit of measure matches your contract. Our AI flags unit mismatches automatically.

7. Quantity Discrepancies

The Tactic: Billing for quantities you didn't receive. Invoice says 100 units, you received 95.

How to Catch: Count delivered items (or at least spot-check). Compare invoice quantities against delivery receipts. Our system can integrate with receiving processes.

8. Hidden Fees

The Tactic: Adding delivery charges, fuel surcharges, processing fees, or other charges not specified in your agreement.

Real Example: A $15 "fuel surcharge" on every delivery. 20 deliveries/month = $300/month in unauthorized fees = $3,600/year.

How to Catch: Review your pricing agreement for fee terms. Flag any charges not explicitly authorized in your contract.

9. Minimum Order Penalties

The Tactic: Charging minimum order fees when your contract says otherwise, or applying fees at incorrect thresholds.

How to Catch: Know your contract terms. Verify minimum order amounts. Track when fees are applied and ensure they match agreed terms.

10. Outdated Volume Discounts

The Tactic: Not applying volume discounts you've earned, or using old discount tiers when you've negotiated better rates.

Real Example: Contract says 5% discount on orders over $1,000. Your $1,500 order doesn't get the discount. That's $75 lost per order.

How to Catch: Ensure volume discounts are applied correctly. ReceiptExtractor can handle tiered pricing and conditional discounts.

The Bottom Line

These "small" overcharges add up fast. A business processing 50 invoices per month, with an average of $50 in overcharges per invoice, loses $30,000 per year.

Manual verification catches maybe 20-30% of these issues. AI-powered verification catches 95%+.

How ReceiptExtractor Helps

• Automatic Comparison: Every line item checked against your contract
• Instant Alerts: Email notification within seconds of finding overcharges
• Detailed Reports: Exactly what was wrong and how much it cost you
• Dispute Templates: Professional reports to send your vendor
• Trend Analysis: See which vendors overcharge most frequently

Don't let vendors take advantage of manual review limitations. Try ReceiptExtractor freeand start catching overcharges today.