5 Ways to Prevent Fraud with AP Automation
As years have gone on, different and more complex forms of accounts payable fraud have emerged. Manual and partially-automated accounts payable departments are the most at-risk of falling victim to these new forms of fraud. In a manual AP department, it’s very easy for duplicate invoices to slip by undetected, or for an invoice to fail to go through the proper channels for approval. With partial automation, your department is still susceptible to more advanced technological forms of invoice fraud, without the proper tools to ward it off. It’s essential to have an automation system in place that is complex enough to recognize and combat even the most intricate forms of fraud. With the right solution, organizations can prevent fraud with AP automation.
1. 3-Way Matching
One of the most common forms of AP fraud occurs when invoices don’t match with POs, or when the goods received differ from what was on the PO or invoice. This form of fraud can happen when someone intentionally changes a line item on an invoice to charge more, or when there are mistakes due to human error. With the process of 3-way matching, artificial intelligence-assisted automation matches the information from the PO with the information on the invoice and receipt of goods. Payment for the invoice will not be authorized unless all the information matches exactly, and if the information doesn’t match, it is marked as an exception for the appropriate department to review.
2. Validating Suppliers
One of the more serious forms of accounts payable fraud has come about when fake companies mimic actual suppliers and send fake invoices. With enterprise-level accounts payable automation, the solution provides a supplier portal, complete with onboarding services and a detailed supplier registration network, so you can be sure that your electronic invoice is coming directly from your supplier. During the supplier onboarding process, enterprise-level solutions will validate the supplier’s Federal Employer Identification Number (FEIN), check the company against organizations to ensure legal compliance, and route the supplier info to be internally approved before becoming part of the official supplier master file.
3. Duplicate Invoice Flagging
With enterprise-tier automation, the chance of processing duplicate invoices is eliminated. High-level solutions will include features that flag any duplicate (and even suspected duplicate) invoices that come through the system. Once the invoice is flagged, AP can review it and prevent the duplicate from being paid out. With duplicate invoice flagging, AP is able to avoid paying a single invoice more than once.
4. Automated Approval Process
Another huge way that organizations can prevent fraud with AP automation is by implementing a solution that offers complex automation of their approval workflow. With an automated approval workflow, invoices are guaranteed to go through the correct channels, as the coded rules are based on the organization’s workflow and guidelines—not the solution’s. Invoices above a certain amount can be designated to certain users—so payment cannot be made without the highest designated user’s approval. An automated approval workflow is a sure way to ensure compliance in AP.
5. Detailed Invoice History/Tracking
With accounts payable automation, the solution will provide intricate visibility, so that AP can see each invoice at every step in the process. Actions made by everyone involved on an invoice, whether it be supplier, AP staff, or AP manager, are recorded and stored permanently in the cloud. With each user’s history being on file, the issue of not knowing who the invoice has gone through before being paid is eliminated.
Successfully Prevent Fraud with AP Automation
With the prominence of payment fraud across the globe, it’s crucial for organizations to ensure that they have the most advanced tools to combat it. In 2021 it was reported that 71% of organizations fell victim to payment fraud—with accounts payable being the most susceptible department. Luckily, high-level accounts payable automation provides solutions that can mitigate the risk of payment fraud and put those worries to rest.