Janet joined the PairSoft team upon its merger with Paramount Workplace, where she was also an integral part of the sales team for years. Janet resides in Michigan with her family.View all posts by Janet Martin
Janet Martin • April 13, 2023
Fraud is a major concern for businesses and AP teams of all sizes. According to the Association of Certified Fraud Examiners (ACFE), businesses lose an average of 5% of their annual revenue to fraud. Fraud can take many forms, such as fake vendor invoices, ghost vendors, and duplicate payments. Fraudulent activities can be committed by internal employees or external parties, such as vendors or hackers. Accounts payable automation software can reduce the risk of fraud in the following ways:
An AP automation solution automates the invoice approval process, which can detect and prevent fraudulent activities through validation. Invoice automation can three-way match the invoice details with the purchase order, receipt, and contract in one AP workflow to ensure that the goods or services have been received and the prices are accurate. This can prevent fraudulent activities such as overbilling, double billing, and fake or duplicate invoices.
Electronic invoicing (e-invoicing) is a paperless invoicing system that allows businesses to send and receive invoice data electronically. E-invoicing eliminates the need for paper-based manual tasks, which are more susceptible to fraud, such as forgery or alteration. E-invoicing also provides a secure and auditable trail of the invoice, which can help prevent fraudulent activities.
AP solutions can automate the approval process for invoices and payments, which eliminates manual data entry and reduces the risk of fraud. Automated approval workflows can route supplier invoices and payments to the finance team for approval based on predetermined rules and criteria. This can prevent fraudulent activities such as unauthorized payments and approvals.
AP automation can automate the payable process, which can reduce the risk of fraud. Digital payment processing can securely and efficiently process payments electronically in real-time, eliminating the need for time-consuming paper checks, which are more susceptible to fraud, such as check tampering or forgery. One of the biggest benefits of AP automation is that it also provides a secure and auditable trail of the payment, which gives you full visibility to help prevent fraudulent activities.
A huge selling point of accounts payable automation solutions is that they provide touchless fraud detection and monitoring capabilities over your financial system. Fraud detection and monitoring can analyze invoice and payment metrics for irregularities or anomalies right within your ERP system, such as unusual amounts, late payments, or suspicious vendors. This can help prevent fraudulent activities such as ghost vendors or duplicate payments.
AP automation can enforce the segregation of duties, which can prevent fraudulent activities. Segregation of duties is a control principle that requires different personnel to perform different functions in the AP process, such as invoice processing, procurement, approval, and payment. This can prevent fraudulent activities while preventing bottlenecks in your cash flow and giving you full visibility over your automation system and AP staff.
AP automation can provide audit trails and reporting capabilities, which, apart from their convenience for the AP department and CFO at month- and year-end, can pinpoint anything that seems amiss . Audit trails and reporting can provide a detailed and auditable record of the AP process, including invoice and payment data, approvals, and changes. This can help detect and prevent fraudulent activities and provide evidence for investigations and audits.
In conclusion, AP automation can reduce the risk of fraud by automating and streamlining the AP process, providing secure and auditable trails, enforcing controls and segregation of duties, and detecting and preventing fraudulent activities. By implementing AP automation, businesses can improve efficiency and reduce the risk of fraud, which can ultimately save them time, money, and reputation.
Get a demo today on our natively integrated AP automation solutions to help you get the most out of your ERP while protecting your business.