Whether or not accounts payable fraud has occurred in a business, companies of all sizes are vulnerable to it. Fraud can be committed by external parties or internal employees, and tight controls need to be in place to prevent it. According to a survey by the Association for Financial Professionals, 81% of organizations were targets of payments fraud in 2019.
Now lets take a look at some of the common ways accounts payable occurs and how AP automation can help minimize the risk.
Internal Fraud:
- False billing: Employee creates false invoices to pay themselves.
- Fraudulent payments: Employee makes false payments
- Reporting Fraud: Employee changes financial data without authorization after payments have been processed.
External Fraud:
- Phishing: External party uses false email and other communications methods to gain access to sensitive information like passwords, pins and banking info.
- Duplicate payments: While duplicate invoicing is often a mistake, a vendor employee might do this as intentional fraud. Often duplicate payments are caused by employee error in the payee organization.
- False Vendor Fraud: Payments made to a false vendor or unauthorized vendor for goods or services that don't exist or are fraudulent.
How to Prevent Accounts Payable Fraud with AP Automation
Manual data entry and inefficient processes are among the top pain points for accounting departments, and manual process are more vulnerable to fraud than automated ones. So, it's no surprise that one of the best ways to combat accounts payable fraud is with an AP automation software solution. Here are some of the ways you can help prevent accounts payable fraud with the right AP automation software.
- Prevent false billing, fraudulent payments and reporting fraud by aligning security and payments teams on one solution with user-based approvals and time stamping for audit traceability/ approvals tracking, as well as customizable workflow management controls.
- Prevent phishing and duplicate payments with built-in detection, prevention & security
- Securely transfer funds from your bank directly into your vendors' with ACH direct - Why Direct ACH?
- Positive Pay – Banks only cash paper checks on a pre-approved basis – How Positive Pay Works
- Reduce reporting fraud by integrate payments software directly with your accounting software if available to eliminate manual data entry.
