The Digital Age has provided many opportunities for businesses of all sizes. But it has also brought with it new risks. Accounts Payable fraud remains a key concern, studies show there has been no drop off in cases despite the rise in digital processes. Thankfully, there are ways that a business can prevent AP fraud – not least AP automation.
In the past, fraud was mostly a paper and pen crime. This has not completely changed, but cyber criminals are increasingly active in devising new ways to defraud companies of considerable sums of money. In fact, studies show that during the Covid-19 pandemic, cyber criminals have been as busy as ever in their efforts.
According to a report from the UK’s National Fraud Intelligence Bureau, there was three-fold increase in reported financial losses to fraud and cybercrime in just the first six months of this year. In fact, from January to June 2021, losses of almost £1.3 billion were recorded.
Amongst the most common forms of fraud, however, is the Business Email Compromise (BEC) which directly affects the Accounts Payable departments of an organisation. Research carried out by Abnormal Security showed that from the earliest stages of the Covid-19 pandemic, fraudsters were busying themselves to take advantage of the global health crisis. But between Q2 and Q3 of last year, BEC fraud rose by a staggering 81%.
Increases in BEC fraud has been exponential, so projections for 2021 are worrying. And with AP Departments especially vulnerable to BEC fraud schemes, the value of protecting against and preventing these fraud schemes is extremely high.
The reason for focusing so intensely on AP is simply down to the fact it is here that payments are processed, and the sheer frequency of payments there makes it susceptible.
But despite the range of fraudulent scams the AP Department had to deal with every day, there are steps that organizations can take to reduce the risk they face.
5 Tips To Preventing Accounts Payable Fraud
Tighten up preventative controls already established so as to ensure emails and invoices are from verified vendors. There is some risk management software available that can track vendors through contact and communication patterns.
Visibility is hugely important in the fight against any kind of fraud. Tracking an invoice’s journey is a big part in ensuring this, with everything from its source to the route it takes to who approved the payment. Automated approval processes – such as those AP Automation solutions provide – deliver exactly this level of visibility, and thus control of the approval process more effectively, reducing the risk of financial losses.
Matching payments to genuine invoices is the surest way of ensuring everything is above board. With AP Automation solutions, this important process is automated, making it possible to match invoices with corresponding purchase orders and receipts. More importantly, it red-flags attempted payments that have no apparent invoice match or relevant receivables.
Real-time data monitoring is also a key part of preventing accounts payable fraud. Automated AP solutions facilitate real-time changes and updates, making it simple to report on transactions and to create a detailed digital trail of invoices and payments for audit purposes. So, when it comes to satisfying your compliance obligations, highly accurate reports can be produced on demand.
Once again, technology can be key to fighting fraud with advanced software minimising the human influence on procedures. But according to a 2020 Business Insider Intelligence survey, some 47% of businesses are still relying on manual processes for approval. Machine learning makes it possible to identify duplicate invoices, late and extra charges, or any kind of suspicious activity – traditionally, the parts of the overall system most vulnerable to human interference.
If you would like to talk to a Kefron’s team member and learn more about Accounts Payable Automation technology click here.