According to our 2022 global research study, 44% of global finance teams know a victim of accounts payable fraud in the last three years. It’s a frightening issue facing too many finance teams worldwide.
Finance fraud can take many forms and the accounts payable department is all too often the team who is targeted.
Most simply, fraudsters carry out activities to encourage companies to make fraudulent disbursements to their suppliers, vendors and employees, or ‘fake’ versions of these.
In our independent study, over half of finance teams have experienced internal fraud and noted expense fraud as the number one method used. A staggering 69% teams have experienced external fraud with duplicate invoices being the most prevalent.
In a recent Censuswide study, UK financial professionals estimated over £295,000 is lost every year to invoice fraud per business, and US businesses lose on average $300,000 per year.
Globally, and with the COVID-19 pandemic thought to be a major factor, invoice fraud has been on the rise. During the first three months of 2020, invoice and payment fraud increased by more than 75%.
With the range of new and sophisticated fraud tactics growing, how equipped are you to deal with fraud if it happens to you? Here are some useful ways to project your company.
- Maintain a robust supplier process
Starting with new supplier onboarding and going right through to making payments, having a consistent process for managing your supplies will provide you with protection.
Collecting and verifying new supplier details at the point of onboarding ensures you have the correct information. You should create and maintain a digital copy of your Vendor Master File, and this should be hosted securely, with access to only those who require it.
Maintaining your records regularly helps you stay up to date with the correct information you hold for each supplier.
Our recent LinkedIn Poll, 46% respondents review their Vendor Master File annually. 23% review it quarterly, and 15% never review it.
If you are in regular contact with your suppliers you should know if their details are correct and / or are changing. When processing changes to vendor details, 76% of our poll respondents validate these via phone call. 21% validate changes via email and 3% don’t validate them at all.
2. Automate your accounts payable process
Having a digital accounts payable process dramatically reduces the opportunity for fraud to occur – fact.
Most automation tools come with a plethora of anti-fraud features. With all supplier details held digitally and centrally within the software, Artificial intelligence (AI) matches supplier details on new invoices against the master data. Anomalies are instantly flagged for review so any false data, such as bank details, can be checked before it’s too late.
Any duplicate invoices are also highlighted, to ensure these do not make it through approval for payment more than once.
By moving away from a paper invoice process, teams gain a digital audit trail of all invoices that’s more secure and better protected.
3. Switch to digital payments
Our study shows that 69% companies use digital payments as a means of protecting them from fraud. Not only do digital payments offer increased security, they are also quicker and more accurate.
There a few options for digital payments, including:
- Automated payment technologies. Automation completely eliminates paper, storing all invoices and vendor details accurately and securely. Choose from a range of payment options within the platform.
- Virtual cards. Like credit cards, but they only exist online and are completely secure. They are impossible to recreate, share, or steal because the card details are dynamic and unique for each and every transaction.
4. Train your team on fraud
In order to spot fraud, you need to know what you are looking for.
Our study reveals a potential training gap, with 88% respondents stating that their team would benefit from accounts payable fraud training.
Carrying out regular and ongoing training on finance fraud will help teams develop the skills and confidence needed to recognize unusual activity from the outset.
If everyone is trained and there is a clear process in place, then teams will be more equipped to manage fraud and reduce the impact on the wider business.
Summary
With a range of proven fraud tactics available to them, today’s accounts payable teams have an opportunity to better protect their companies.
Technology is helping to fight the battle against finance fraud by removing the manual steps that traditionally provided an opportunity for fraudulent activity. Finance teams who invest in technology that contains anti-fraud features are providing better protection to their company by lowering the risk of fraud.
But the steps to successful fraud management also includes investing in your finance team and finance processes by offering ongoing training and maintaining robust processes.
This multi-pronged approach will help support the growth, stability, and viability of today’s most successfully run businesses.
Access the full Accounts Payable Fraud Research Report for the full study findings or talk to us about training.
