As the world’s wealth has grown, so, unfortunately, has accounts payable fraud. And it’s not being done by the bad guys with guns and bandanas. In fact,
Accounting fraud is not new, and no business is immune. Accounts payable (AP) fraud is one of the most common types of fraud, exposing businesses of all sorts to risk. And the percentage of financial professionals in North America who reported attempted or successful fraud has continued to grow in recent years.
Fraud can be committed within your business or externally. Proper controls are vital to protect honest employees and thwart those inclined to steal. Even if fraud does not occur, the mere possibility or accusation of fraud can cause irreparable damage to your brand. When Harry Markopolos, the accounting sleuth, accused General Electric (GE) of suspected accounting fraud, GE’s stock dropped 10% overnight.
Businesses cannot afford the reputational risks and loss of trust that result from attempted or successful fraud, particularly when it originates in-house.
Fraud: internal and external
When organizations rely on manual processes, it becomes easier for fraudsters to find vulnerabilities within the system and exploit them. Manual data entry and inefficient processes are the top pain points. Automating Accounts Payable (AP) is a simple yet effective way of driving down back-office costs while securing your system.
Examples of internal fraud:
False invoices can be created for self-payments. In this type of fraud, an employee might work alone or in collusion with an external partner.
An employee may make unauthorized payments, usually via check or electronic transfer of funds. Rapid or unusual changes in daily financial reports should be investigated immediately.
Edited financial reporting:
An employee could make unauthorized changes to financial data after processing false payments. A division of duties would help detect and prevent this.
Examples of external fraud:
A person outside of the company could fraudulently try to obtain sensitive information such as credit card numbers, PINs, personal financial information, or passwords. Accounts Payable departments are the most susceptible to BEC (Business Email Compromise) fraud. Employees should be warned about opening and clicking on unsolicited emails.
A vendor could submit more than one invoice for the same product or service. This is not always fraud per se; vendors could be paid twice due to clerical errors or if invoices are submitted in different formats. Either way, it’s a loss for the company.
An invoice could be submitted by an unauthorized or fictitious vendor for payment for undelivered items or services.
As you can see, the opportunities for fraud, whether internal or external, deliberate or accidental, are many. The best tool for guarding against these occurrences is a secure automated AP system such as
Reduce risks with AP automation
Digital Audit Trails:
Finance professionals can use automated digital auditing trails to secure every step of the AP process. With
Automated Approval Processes:
Beanworks automates the
AP Workflow Reporting:
With AP workflow reporting, your team can evaluate and analyze invoice data quickly and efficiently and recommend improvements to address any irregularities. They can identify bottlenecks in the approval process, enabling AP managers to reassign workloads and adjust to slower or busier times throughout the year. Beanworks AP automation provides tools to monitor your company’s spending, noting anything out of the ordinary. The software can identify duplicate invoices, extra charges, or suspicious activity as it completes your regular spending analysis.
Gain an accurate, real-time report of your monthly accrual. Improve visibility into invoices as soon as you receive them and throughout each step in the approval workflow. Set up customized approval channels for your team. Reduce the risk of duplicate payments, errors, and fraudulent activities by ensuring that only the right invoices are paid at the right time.
Empower your accounting team by reducing data entry and approval follow-ups, making your accounts payable process more cost-effective and less prone to errors.
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Discover what Beanworks AP Automation can do for your business.
By Quadient Accounts Payable by Beanworks,