According to the Association of Certified Fraud Examiners, organizations lose 5% of their annual revenues to fraud, with check and payment tampering ranking among the most common and costliest schemes. When employees steal company funds it is called internal fraud, and it is a major fear for accounts payable.
Typical schemes include billing for services never received or paying an invoice twice. In order to maintain stability and credibility, organizations need to prioritize fraud detection and practice good recordkeeping. Here are the most important steps to take to keep your organization secure.
Review Your Accounts Payable Process
Are your books in order and regularly reviewed? Compile account transactions and do not be predictable when you review them. If fraud is occurring, the culprits won’t have the notice to cover the trail. Take your time to examine any suspicious details and ask questions about items that seem amiss. Balancing your books is key to catching fraud before it’s too late.
Upgrading to AP automation takes it a step further, creating a more streamlined and secure approach. Automation centralizes your workflow so financials are easily accessible, and when something is amiss it can be addressed immediately. Paypool keeps meticulous records of transaction-level data, guaranteeing each user is accountable for every action they take within the system.
Watch Out for Red Flags
Regardless of whether or not you use AP automation, you should always be aware of certain warning signs of fraud:
- Unusually large purchases on a company credit card
- Payments that are unusually high or low without a comparable increase in services
- Payments that routinely fall just under the amount requiring additional authorization or scrutiny
- Invoices or documents that look photocopied or otherwise altered
- Invoices missing important details, like vendor address or phone number
Distribute Approvals Across Team Members
“Power tends to corrupt, and absolute power corrupts absolutely.”
John Dalberg-Acton’s famous remark highlights the importance of distributing financial accountability across multiple team members. Fraud can occur when a single individual has the power and opportunity to commit it. To prevent this, distribute accounts payable review duties across multiple team members. If you use an AP automation solution, update the approval flow so no one person has total control or access. This separation of responsibility is one of the most effective ways to deter fraud in the AP process.
Get the Most From an AP Automation Solution
Money isn’t the only thing automation can protect. Fraud can compromise your organization’s sensitive data, including employee and vendor information. This could irreparably damage your organization’s reputation. A comprehensive AP automation solution can provide multiple safeguards including approval routing, notification for invoices over a certain amount, and requiring dual signatures on payments.
Additionally, the advantage of using a paperless solution is its integration with your enterprise resource planning (ERP) or accounting software, vastly improving invoice and payment processing times. Ensure your organization is leveraging the built-in payment controls that come with AP automation solutions.
Secure Peace of Mind
If not addressed immediately, fraud can be incredibly costly to a business. AP automation provides an additional layer of protection and efficiency. To learn more about how an AP automation solution like Paypool can improve your workflow’s fraud security, request a demo today.