Best practice
AP invoice automation
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Fending off Fraud with AP Automation

The rise in digital payment and invoicing methods has created a world of opportunity for businesses around the globe. Flexibility, efficiency gains, and new business opportunities have accelerated in the past decade, all thanks to the modern era of technological advancements. Yet despite the advancement in technology around payables, there’s an alarming overall increase in criminal and fraudulent activity. Thankfully, in addition to efficiency optimization, technology also provides parallel ways to combat the risk of exposure to fraud.

With fraud levels on the rise you need a gatekeeper of cash

According to the 2018 AFP Payments Fraud Survey, published by the Association for Financial Professionals and underwritten by J.P. Morgan, payment fraud reached a new high in 2017. With statistics predicting that fraud is going to continue to rise, potentially hitting record highs, organizations around the world are looking to implement policies and systems to better protect their company’s cash from would-be fraudsters and criminals. 

One critical way of doing this is through accounts payable automation. As the gatekeeper of a business’ cash, the accounts payable department is a likely target of fraudulent activity. The threat is two-fold, coming from potential internal and external sources; vendors, rent payments, third-party suppliers and employee travel and expense must all be monitored closely. Accounts payable automation creates a window into these activities, allowing everyone from the AP staff to the CFO to get updates in real-time based on the latest data, greatly minimizing the chances of fraud going on undetected.

Securing the Company’s Cash

It’s essential that management in a business invest in the secure, digital systems to make accounting fraud difficult or impossible. Accounts payable automation seals the company’s cash flow into an airtight system, allowing for establish vendor vetting against inbound invoices and payment requests and flagging anything that doesn’t match with existing master data. Recurring accounts payable reports can help AP managers monitor large transactions passing through AP as well as the suppliers receiving the most frequent payments.

Detecting Fraud

Fraud is most often well hidden among thousands of typical business transactions, making finding it like looking for a needle in a haystack. Thankfully, accounts payable automation makes it easy to know what to look for and stop these activities before the business’ cash is impacted. 

Automation allows management to set up automatic checks of any new vendors being set up within the system, creating a gateway to verify vendors from potential billing schemes. This can and should always be performed by someone other than the party responsible for setting up the vendors initially. Look for potential red flags among these new vendors, such as missing contact information or duplicate vendor profile data to existing vendors.

During the month-end process, the typical reconciliation of accounts also provides an opportunity to monitoring suspicious behavior. AP automation solutions makes the normal closing period much more efficient and streamlined, giving the AP team time back to make these checks and note anything out of the ordinary. And transactions from the company’s checkbook that don’t match accounts payable entries are the top priority for investigation. Additionally, payments with round numbers, invoice number gaps and unusual payment frequencies should be noted and verified.

Streamlining the Audit Process

Industry experts recommend conducting unscheduled audits as a way of trapping potential fraudsters. The advancement of AP automation in the last 10 years has dramatically increased the amount and depth of data that fall under the scope of an audit, while simultaneously easing the workload of auditors having to filter through this data. Auditors benefit from the real-time updates provided by automation, knowing they can access accurate data from anywhere and at any time. 

For detecting fraud, AP automation does an incredible job of creating a full digital trail of invoices and payments, eliminating the past hassle of following paper and undocumented steps in the invoice process. All invoices are archived and can be easily pulled up for inspection, and each step of the process has a unique “fingerprint” of where it’s been and who’s been involved in the process. AP automation also clearly defines who in the organization has access to important functionality within the AP system, establishing controls and protocol which makes committing fraud more difficult and detecting fraud easier. 

While accounts payable fraud is a somewhat unavoidable part of doing business, AP automation gives companies a sense of security that they have the tools to protect their company’s hard earned cash and give their employees the ability to act as security liaisons against fraud and theft. MediusFlow’s robust reporting capabilities and flexible business configurations position it as a key tool for organizations looking to conduct business in a secure, reliable environment.

Daniel Saraste

Daniel Saraste

Vice President - Product Marketing