How to Avoid Payments Fraud

How to Avoid Payments Fraud

Companies must improve their accounts payable procedures to avoid losses from payments fraud.

Finance professionals from all over the world encounter accounts payable fraud. According to a 2016 report by the Association of Certified Fraud Examiners (ACFE), the median loss per business due to fraud was $150,000.00 with the vast majority coming from financial statement loss.

In their 2018 survey held among nearly 700 treasury and finance professionals, the Association for Financial Professionals (AFP) found out that 78% of respondents had been hit by payments fraud in 2017.

“It is alarming that the rate of payment fraud has reached a record high despite repeated warnings,” said AFP President and CEO Jim Kaitz. “In addition to being extremely vigilant, treasury and finance professionals will need to anticipate scams and be prepared to deter these attacks.” The association underlines that payment fraud has become more sophisticated and requires that companies improve their accounts payable procedures.

Accu-Image, an industry-leading document and information management firm stresses a digitized accounts payable system and other key points to help businesses reduce the chances of payment fraud. “There are many ways to scam accounts payable,” says Larry Bennett of AccuImage, “everything from creating false invoices to check fraud. But it’s also important to remember that a tremendous loss of revenue can come from unintentional bookkeeping errors, or exceptions, due to outdated or inferior accounts payable methods. A secure digitized accounts payable system will help reduce fraud as well as all payable interaction errors and inconsistencies.”

“No matter how you receive invoices – mail, fax, email, etc. – a digital payable automation solution can capture, organize and deliver those documents to the appropriate individuals for review, coding and approval, which will reduce errors and fraud, as well as save time and money.”

 

– Larry Bennett, AccuImage

Here are a few tips from Basware that can be used to identify and prevent fraud in an organization:

1. Create audit trails, have staff with clear job descriptions and divisions of duties, and utilize digital processes that don’t rely on paper.
2. Monitor requests for duplicate payments. Duplicate invoices can happen more often than realized. Always beware.
3. An important control to put in place to prevent fraud is ensuring that employees don’t have more authority than is needed to perform the duties of their role.
4. Build strong process integration between Procurement and Accounts Payable. Strong process integration between Accounts Payable and the Procurement function ensures that goods or services are ordered according to purchasing policy, and that they are appropriately received before the invoice is paid.
5. Use data to uncover trends in supplier invoices. Data rich organizations can identify overpayments to their suppliers by monitoring trends in supplier performance or supplier spend. Organizations can take a more proactive approach to preventing duplicate payments by defining parameters that identify potentially fraudulent invoices and routing these invoices to someone for review.

Image: Pixabay

Share this article:

Related Articles