Prevent Fraud with Accounts Payable Automation
If you work in accounts payable, you already know that the AP department is as susceptible to fraud as any other office, and probably more so. After all, it’s where the money goes out. But how can you prevent fraud?
A recent study determined that the most common forms of AP fraud are billing schemes, fraudulent expense reimbursements and check tampering. And it’s much easier for a crook to pull off any one of these crimes if the company does business with a lot of vendors.
The temptation to give oneself an unauthorized bonus comes from many places. The employee may be hard up for cash, for instance, or angry about being passed over for a pay raise or promotion. The most common factor weighing in the decision to embezzle is that it looks easy. And often it is. Especially with a paper invoicing system.
With paper invoices, there is much less transparency and accountability. It’s easy to slip a phony invoice in with the hundreds of others the company receives, then write a paper check to cover it. Paper-based systems typically are slow-moving and cumbersome, so it’s easy for other employees to overlook what might otherwise raise a red flag with an APIA (accounts payable invoice automation) system. The AP department is so busy trying to input data, chase down approvals and get a check in the mail before it’s due that there’s little time to verify and less to take steps to prevent fraud. The more chaotic the process, the more tempting it is for someone to take advantage.
With APIA, these problems evaporate, leaving time to develop processes to prevent fraud. Moreover, APIA naturally increases security and transparency, as every bit of data is recorded in the system and made readily available for inspection. The data can be quickly and easily retrieved and checked against other data that may raise a red flag.
E-invoicing also offers increased accountability. The invoicing workflow can be designed such that only certain personnel have access to sensitive records. More important, crucial functions like payment authorization can be restricted to only a designated few. Accounts payable automation can even be set up so that the computer insists that predefined policies and procedures are followed.
APIA provides an audit trail that can prevent or lead to quick and easy discovery of fraudulent activity. In the case of an audit, the data is so easy to find and work with that fraud is discovered before substantial damage can be done.
Transparency and accountability are a thief’s worst enemy, which is an excellent reason to bring your AP department into the 21st century with APIA.