Accounts Payable Fraud

The Scourge of Businesses

Security, which involves preventing and fighting fraud - especially for documents - is a topic that continues to grow in today’s world of ongoing digital transformation. Warning lights are flashing red at many companies: according to The Association of Certified Fraud Examiners reports that U.S. Businesses lost in 2019 an average of 5% of their gross revenues to fraud.

What is Invoice Fraud?

Simply put, fraud is a criminal action intended to result in some kind of financial or personal gain. In the case of invoice fraud, this takes forms such as false invoices (charging a company for goods or services that never existed), inflated invoices (overcharging), or duplicate invoices. However, despite the implementation of increasingly sophisticated mechanisms to check, prevent, and/or protect, data shows that corporate fraud continues to grow. According to PwC's 2020 Global Economic Crime Survey, 56% of UK business surveys stated that they had been impacted by some type of economic crime within the previous two years.

Indeed, two indisputable exists: first, no company can escape the danger or fraud and second, there is no direct connection between company size and the monetary amounts of fraud. It is also worth noting that the human factor is both an Achilles heel for companies as well as a savior. Many, if not most, fraud attempts or schemes are defeated by human intervention.

Size plays a factor because not all companies are on equal footing when it comes to fighting against fraud. The human, organizational, and financial means implemented for protection will be different for a small, medium, or large enterprises. In addition, while going digital is a common way that businesses have fought back, this also opened a new way through which fraudsters can enter. Indeed, better technology has meant better informed and organized swindlers; the two are intrinsically linked with each other.

Despite the increasing amount of criminal activity, a growing awareness of the issue, and the considerable risks involved many organizations don’t have a contingency plan that they can activate if fraud occurs. Not for the most common financial impact, not for data theft, and not for the potential impact on the company’s reputation.

Invoice Finance Fraud : How Can CFOs Lead the Fight Against Fraud ?

The CFO is responsible for the company’s financial health and therefore explicitly involved with any losses caused by fraud. But their job is no longer limited to simply crunching or reporting numbers. They now fill a need to safeguard and nurture a business through unprecedented perils of loss and the potential consequences for customers. They are, in fact, a general on the very front line of the struggle. With all the information on hand to review – from company organization to cash management - they are the ones best able to identify a widespread problem, mobilize all available resources, and administer any solution towards guarding the company’s financial information.

Indeed, the company’s finance director must adapt freshly learnt skills to spot innovative and more aggressive cheating, notably for invoice finance fraud. And these methods go far beyond traditional forms such as internal embezzlement and industrial espionage.

"Our technologies are used to detect falsification on various types of documents, such as pay slips, identity documents, proof of address, etc.

Pay slips are a very real example. By implementing steganographic analysis technologies, we can detect whether information such as numbers, dates, names, or salary amount were modified."

Jean-Marc Pédréno, Chief Technical Officer, Yooz.

Invoice Fraud Detection: Your Guide

Opportunities for crime arise from opportunity and, in the case of invoices, vulnerabilities in the invoice process. In many cases, these vulnerabilities can be rectified by automating time-consuming and repetitive manual tasks that are sources for errors. CFOs who have adopted automation also see an additional opportunity to enable their team to refocus their efforts on other areas such as statistical analysis, risk prevention, and strategic consulting.

Why is technology so key to invoice fraud detection?

Technologies are at the origin of modernization and digitization within companies.
Technologies help finance departments systematize fraud detection.
Technologies offer more “firepower” against fraud and enable adaptation that is not offered by more traditional methods.

Did you know?

Data, which has become an undisputed source of value for the company’s strategic growth decisions, is now also the cornerstone for finance departments. This only raises the impact of risks associated with data integrity and security. CFOs need to work with experts to master this data science and rise to the occasion in their effort to reduce fraud and improve reporting.

The 2019 PwC report confirms this trend, stating that CFOs in 2019 were convinced of the need to surround themselves with new talent, employees with technical-operational profiles able to master software robots. This includes data scientists, business analysts, and more.

The most advanced AP Automation solutions use a variety of different artificial intelligence technologies that enable finance and accounting teams to make their processes more secure and more reliable.

These expert systems are involved from document capture, the very first step in the document automation process, to detect fraudulent types of behavior. Examples include using steganographic shape and metadata analysis to detect modified information on an invoice by tracking down any changes made in the image, such as bank details, which is one of the leading sources of invoice fraud. Steganographic methods include a frequency analysis component that detects falsified information by identifying changes made to an image, such as amounts, dates, or names.

These technologies integrate powerful algorithms that can not only adapt to all types of documents – even those with variable structure – but also learn from examples and create their own knowledge base. For example, statistical analysis can detect monetary amounts that are out of the ordinary with respect to known data in supplier history. Solution users can then be alerted if amounts higher than usual are found. This type of technology also detects suspected duplicates, that is, invoices with the same numbers and supplier names.

Remember, companies with a proactive approach gain many benefits including: greater customer loyalty, reduced operating costs, better company brand image (goodwill), and even promotion of the brand value as an employer. Implementing measures such as accounts payable fraud detection can further enhance financial security and efficiency. Save money, increase value. It’s a winning situation!

Preventing Accounts Payable Fraud in Small Businesses

As a small business, there are a constant and growing number of challenges facing you. Whether it’s finding new customers and building brand awareness or constantly trying to get an advantage over the competition, UK businesses are having to become more agile, more intelligent, and more resilient than ever before.

But one of the biggest threats to the success of a small business is in finance, more specifically in the finance area. Accounts payable fraud in small business is quickly becoming one of the most common types of financial scams whether it originates internally or externally.

Here we explore what kind of fraud specifically targets small businesses as well as how to prevent it from occurring.

How Automation Can Prevent Accounts Payable and Payroll Fraud

If your business has never been a victim of accounts payable and payroll fraud, congratulations! But unfortunately, it’s only a matter of time until something happens.

Fraud attempts including fake invoices and receipts, switching out bank account numbers, phishing, and ghost employees are all common types of fraud. All – and more – are only expected to increase. If you want to be proactive and protect the organisation, you’ll need to provide the Accounts Payable Department and payroll team with the tools that stop and prevent fraud from occurring. Learn how an automated Accounts Payable system can do just this and make sure that your finances stay safe.

Accounts Payable Fraud Risks: Prioritizing Risk Management

Why should CFOs make leveraging advanced technologies a priority in their Accounts Payable fraud risk strategies to win the fight against fraud? Because security not only brings a piece of mind for an organization but also a competitive edge. All done by simultaneously streamlining your Accounts Payable process. But which to choose?

Three types of essential advanced technologies that your business needs to prevent fraud in its billing services are: digitalization, big data and machine learning. Yooz Accounts Payable automation utilizes all three of these technologies along with artificial intelligence (AI) and many others to fight against fraud in the Accounts Payable process.

Explore why now is the time to start the internal conversations to get your leadership and team onboard with digitalizing your invoice and payment processes with an Accounts Payable automation solution.

Like Profit? Accounting Fraud Detection and Prevention

Financial scandals are rampant, and especially for finance departments dealing with daily attempts at accounting fraud, it can too often seem like they are fighting an endless and unwinnable battle. The numbers agree with UK businesses losing an estimated £137 billion to fraud every year.

Cloud-based automation can help. Businesses that implement an automated accounts payable system have been proven to benefit from built in security features that help detect and prevent fraud from the beginning.

Why Every Company Needs a Security Audit Trail

Feeling safe and secure? A security audit trail is the way to achieve this. However, despite being an important idea with highly practical implications, many companies lack any kind of true audit trail ability. Going a step further and creating this capability via AP automation means having an automated process create a digital security audit trail that will catch and record every interaction, able to answer every question.

You don't have to be an accountant or auditor to think that's a good idea!

The Importance of Segregation of Duties in Accounts Payable

Protecting a company’s finances and reputation is crucial for business success. Accounts Payable fraud poses a significant risk, one which can lead to financial losses and reputational damage. Implementing strong internal controls, particularly segregation of duties in Accounts Payable, is essential in order to mitigate this risk. Segregation of duties involves dividing key responsibilities among multiple individuals, creating a system of checks and balances by ensuring that no single person has complete control over the entire payment process.

Everything You Need to Know about UK SOX for Accounts Payable

In response to high-profile corporate failures, the UK government carried out investigations that ultimately led to the creation of reform proposal, commonly referred to as UK SOX for Accounts Payable. This legislation is targeted as enhancing the credibility of financial reporting, strengthening corporate governance, and mitigating Accounts Payable fraud through the introduction of more stringent requirements for directors, public disclosures, fraud resilience, and audit policies.

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