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AP Automation helps prevent the growing finance fraud problem | #employeefraud | #recruitment | #corporatesecurity | #businesssecurity | #


Fraud is a growing concern for businesses around the world. According to the 2020 AFP Payments Fraud & Control Survey, 81 percent of businesses indicated that they experienced payments fraud in 2019. Accounts Payable (AP) is particularly vulnerable to fraud because it’s where invoices are approved for payment, but conversely, it’s also where fraud can be prevented. Fraud is a very costly problem. An average company can lose about 5% of revenue annually due to fraud, or about $3.7 trillion for businesses globally, according to The ACFE [Association of Certified Fraud Examiners] Global Fraud Study.

Fraud can crop up in different parts of the AP process – from entering a new vendor in the vendor master file to processing an invoice – and can be perpetrated from internal or external sources or a combination of the two. For example, an employee could create a fake vendor account or make changes to an existing one, routing payment to another bank account. Other fraudulent practices include creating a fake bill – either for a new or existing vendor – issuing duplicate or multiple invoices, or overcharging an invoice and pocketing the difference.

AP departments can spot fraud through some telltale signs, such as consecutive invoice numbers, invoices with P.O. boxes only, and those from unknown vendors. Other tipoffs include a check amount that is just under the threshold requiring a second approver, or a larger cost that is split up into smaller invoices to avoid hitting that threshold.

The good news is that AP departments can implement best practices to help prevent fraud. Following are four such strategies that leading AP leaders are implementing in their organizations:

Automate as much as possible

Since fraud is primarily perpetrated by humans, AP departments can significantly prevent fraud by removing humans from the process as much as possible. The goal is to achieve straight-through processing, in which an automated system handles all steps and validations according to set rules, and sends the invoices directly to payment without any human intervention. In reality, typically there are exceptions that don’t match the rules in the system, or instances where critical invoice information is missing. Because of this, while organizations aim to have their automated system handle an increasing number of invoices, humans are still needed to handle exceptions.

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