Fraud Prevention Through AP Automation
Fraud prevention has become a major topic of conversation in recent years due to rising numbers. Much of that fraud has been made possible with the advent of online financial transactions. This is a problem for accounts payable departments considering AP automation. Somehow, the idea that paper invoices and checks give the company more control has solidified with decision makers from the C-suite on down to AP staff themselves.
Yet the exact opposite is true when the right AP automation is utilized. The best AP automation solutions make it easier to control the procure to pay process, thus preventing fraud or detecting it quickly if it does happen.
Preventing Fraud. The main reason paper makes it easier to commit fraud is that it is so cumbersome. When an AP department receives dozens of invoices monthly, and writes as many checks, it’s difficult to keep track of what’s going on until it’s too late. Any white-collar crime prosecutor will tell you that many, if not most, fake invoicing schemes utilizing paper checks go on for months – often years – before they are discovered. Even then, the discovery is often made accidentally.
AP technology, however, makes every transaction easily and instantly transparent. It’s also tailor-made for establishing a system of checks and balances within AP, and even involving other departments such as Procuring, to monitor and thus prevent fraud from happening in the first place. The use of cloud technology with AP automation also helps by automating much of the process from procurement all the way to payment.
Discovering Fraud. Perhaps the most obvious way in which AP automation helps discover fraud is by freeing up staff who, in the past, were bogged down in a pile of paper invoices and checks, or chasing after approvals. When staff are free to pay better attention to other things, fraud becomes much easier to spot. This is especially true when data are instantly available for examination and cross checks.
Another way is through internal audits. Audits are more likely to be conducted regularly if the data comes up on a screen with the touch of a button. Not only that, AP automation provides a useful tool for detecting inconsistencies and patterns that are out of the ordinary. The easier the task and the greater the likelihood of success, the more likely it will get done.
Accounts payable is the primary focus of fraudulent activity within companies large and small. But it seldom occurs as a quick hit for a great amount, followed by a one-way flight to Panama. Usually, it involves a subtle bilking over months or years. Often the crime is hidden in plain sight, because with paper transactions red flags don’t pop up as easily. Your best bet to combat this is to utilize a powerful, closed system E-invoicing solution.