How to Prevent Accounts Payable Fraud in Dynamics 365 ERP Systems

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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, PwC, a multinational network of professional services providers, reported a $7.4 billion accounting fraud at Steinhoff, a global retail giant. The crime was led by a small group of top executives and outsiders. The transactions were irregular and complex, involved many entities over a number of years, and were supported by legal documents created after the fact and backdated.

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 billing: 

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.

Unauthorized payments:

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:

Phishing scams:

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.

Duplicate payments: 

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.

Unapproved vendors: 

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  Beanworks AP Automation.

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 Beanworks AP automation, internal audit teams will gain complete visibility into financial data, reports, invoices, and payments. They’ll have insight into any risks involved and can enable accurate financial forecasting. An automated audit process reduces the risks within AP by tracking all payments, verifying the validity of payments, resolving vendor discrepancies, and flagging inconsistencies or anomalies within the system. This approach to AP also allows organizations to stay ahead of compliance requirements for tax filings and audits.

Automated Approval Processes:

Beanworks automates the invoice routing process so you can track an invoice throughout its journey. You’ll have a record of when it was submitted, when it was approved and by whom, and when and how it was paid. By eliminating the paper and storing everything online, your team can collaborate to quickly resolve issues and streamline the approval chain. Comprehensive approval controls will ensure that the right person signs off on any critical issues. This increased transparency reduces risk and increases control.

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.

Ready to automate?

Discover what Beanworks AP Automation can do for your business.  Contact our experts at Quadient Accounts Payable by Beanworks.

By Quadient Accounts Payable by Beanworks,




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