One of the primary areas of a business where fraud can occur is within accounts payable. There are a variety of different ways fraud can happen within accounts payable and when it comes to invoice management.
People who commit fraud are becoming increasingly sophisticated in their techniques in many cases, and it can come from outside the organization. For example, someone who’s going to commit fraud might take the time to research the business and its vendors. Then, they can pretend to be a vendor, and they may send an invoice that ends up getting paid. There are billions of dollars lost in the UK along because of invoice fraud.
Some of the key reasons invoice fraud can occur are because there isn’t much centralized visibility or there isn’t consistency in controls. Most companies also don’t have the necessary resources to detect fraud, and accounts payable departments are already bogged down.
So what can you do?
Automate Invoice Management
Automating invoice management is ultimately one of the best things any organization can do to prevent accounts payable fraud. Automated invoice management not only cuts down on human error, but it allows a business to put in place certain controls and conditions. When these aren’t met, the finance team can be alerted.
Automation also helps bring a sense of visibility into the process, where all pertinent data and information can be accessed in one place.
If invoice management is automated, and an uncommon amount of invoices come in one month from the same vendor as an example, this can be something flagged in the software system and checked on.
Get a Professional on Your Side
If you want to make total and completely sure that there isn’t going to be fraud, even any sort of small financial mistakes, then the best thing you can do is to get a financial professional such as a bookkeeper from Cloud Bookkeeping on your side. In general, finances for businesses can honestly be tough to navigate, so this could definitely be a great option.
Focus on Employee Satisfaction
While invoice fraud can come from someone outside of the organization, it can also be happening internally. It’s important, even in large corporations, to keep a close eye on employees and look for signs of dissatisfaction. Dissatisfaction or frustration at work can be one of the common reasons people commit fraud.
It’s important for employers to check in with employees, and try their best to keep up morale and satisfaction. This isn’t just important to reduce fraud, but it can have positive effects in almost every area of a business. Dissatisfied employees can end up costing a company a lot of money in many different ways.
Also look for employees who never miss work. This is almost always one of the red flags most easily noticed in a business when any kind of fraud is occurring.
While automated invoice management can take care of a lot of the risky areas within accounts payable, employees do still need to be well-trained on what to look for. For example, sometimes if a fraudulent invoice comes in, it may not be flagged in the system. This would require someone within accounts payable checking up on the vendor and making sure they are legitimate.
It’s optimal to combine automation with the eyes and ears of diligent employees. What’s good here is that automation of invoice management frees up employees to be more able to spot fraud and also be more strategic in how they do their job.