How AP automation protects your business from fraud
It should come as no surprise that fraud is on the rise. According to PWC’s Global Economic Crime and Fraud Survey, 51% of organizations experienced fraud over the previous two years. Technological advances and the increased use of social engineering have made malicious attacks more sophisticated and harder to spot.
There’s never been a better time to invest in a robust Accounts Payable automation system to protect your business. AP automation solutions provide the checks and balances, approval levels, and visibility that you need to stay one step ahead.
In this blog, we’ll talk about the history of fraud and how it has evolved over time, and explore how an AP automation solution like Quadient Accounts Payable Automation by Beanworks can help protect your organization from even the most advanced attacks.
The history of fraud
Did you know that the first case of fraud goes back as far as the third century BC? In 300 BC, a Greek sea merchant named Hegestratos created a plan to take out an insurance policy on his ship and cargo. After selling the cargo, he decided to sink the ship to keep the loaned insurance policy money. But his plan failed, and Hegestratos drowned trying to escape.
Fast forward to this millennia and things have gotten much more serious. Companies are losing billions of dollars every year to AP fraud, with more than half of all large companies experiencing some sort of invoice-related fraud every year.
Here are some of the most well-known examples of AP fraud in recent history:
- Waste Management Inc. Scandal: In 1998, Waste Management Inc. was discovered to have reported over $1.7 billion in fake earnings. The company’s CEO and other executives were charged with fraud.
- The Enron Corporation Scandal: In 2001, Enron was found guilty of accounting fraud. The company had created shell companies to hide its debts and inflate its profits. The scandal resulted in the loss of thousands of jobs and over $60 billion in losses by investors.
- WorldCom Scandal: In 2002, WorldCom was found guilty of accounting fraud. The company had inflated its earnings by $11 billion through fraudulent accounting.
- Bernard Madoff Scandal: In 2008, Bernard Madoff was found guilty of running a Ponzi scheme that defrauded investors out of billions of dollars.
In today’s landscape, it can feel daunting to know how to protect yourself and your organization. That’s where an AP automation solution like Quadient AP by Bwenworks can help.
Types of AP fraud
Billing schemes, kickbacks, and expense manipulation are just a few of the ways that a company can experience AP fraud. Fraud can be committed internally by employees, externally by vendors, or by a third party looking to gain access to a company’s AP operations.
There are over 41 different types of fraud. Some of the most common varieties are:
- Billing schemes
- Vendor management fraud
- Check fraud
- Expense manipulation
- Kickback schemes
- Credit card and debit card fraud
- Phishing scams
Let’s explore each one in more detail.
Billing schemes: Creating and paying false invoices or altering legitimate invoices to send money to a fraudster.
Vendor management fraud: When a fake vendor is created and sent money or when inflated or falsified payments are sent to legitimate vendors.
Check fraud: When a check is altered, forged, or counterfeited and used to steal or misappropriate funds.
Expense manipulation: The submission of fraudulent or inflated expense reports to claim large amounts of money.
Kickback schemes: Receiving payments from vendors in exchange for favors such as awarded contracts or additional payments.
Credit card and debit card fraud: When credit or debit card information is stolen and used to make unauthorized purchases.
Phishing scams: An attempt to access a company’s account or fraudulently gain access to confidential information through email.
The good news is that even though there are so many ways that fraud can occur, the tools available to organizations to fight against these increasingly complex schemes are also getting better and better.
How AP automation mitigates fraud
There are many ways that a robust AP automation solution can help organizations defend against increasingly complex accounting schemes.
Approvals
One of the most important things a company can do is make sure they have the right approvals in place. There should never be a single point of failure in any AP workflows — from invoices, to expenses, to vendor payments and management. The more levels of approvals you have in place, the more eyes you have making sure that all your processes are happening as they should.
How Quadient AP can help: Quadient AP lets you set up customized approval channels and levels for your team. You’ll reduce the risk of duplicate payments, errors, and fraudulent activities by ensuring the right invoices are paid at the right time, and multiple people are responsible for the varying level of approval.
Digitization
By taking out the likelihood of human error you’re strengthening your defenses against fraud. You are eliminating the risk of human error, and taking important steps to avoid the chance of manual manipulation that can lead to AP fraud.
How Quadient AP can help: Quadient AP enters your invoice header data with 99% accuracy thanks to its automated, AI-enhanced technology. Not only does this eliminate the risk of keying errors but it will also give your organization a much better ROI on your invoicing costs. In fact, organizations that use AP automation save 60-80% over manual invoice processing with an average cost per invoice of $5 or less.
Visibility
Another reason that manual AP processes are more susceptible to fraud is because of the lack of visibility into the process. With an AP automation solution in place, you’re ensuring that fraud detection becomes an automated, everyday part of your workflow instead of only happening during annual audits when it’s too late.
How Quadient AP can help: With your entire AP workflow in Quadient AP, you can easily report on the workflow history of each document, including approval steps, dates, and comments. This visibility means that there are very few places that suspicious activity can go undetected, helping you eliminate the bulk of the opportunities for fraud.
Choosing a robust AP automation solution
A robust AP automation solution like Quadient AP can help you mitigate many possible fraudulent situations. Quadient AP delivers customized approval channels, digitization, end-to-end visibility into your workflows and much more, to ensure that fraud no longer goes unnoticed.
When you’re ready to mitigate your risk of fraud with the help of accounts payable automation, Quadient AP is here to help. Book a demo today!
