It’s easy for finance leaders to feel like they are under siege by crooks. Finance departments are a target-rich environment for:

  • Supplier fraud (e.g. fake bank details)
  • CEO fraud
  • Client fraud (e.g. fake invoices)
  • Internal fraud
  • Information system intrusion
  • Ransomware
  • Data theft and data destruction
  • Telephone system intrusion

Skeptical? Just consider how much money businesses lose to payments fraud.

A record 82 percent of organizations reported payment fraud incidents in 2018. That’s according to the 2019 Association of Financial Professionals (AFP) Payments Fraud & Control Survey.

Large enterprises are particularly vulnerable to payment fraud attempts. An eye-popping 87 percent of businesses with greater than $1 billion in revenue were the target of payment fraud in 2018, AFP finds. Sixty-nine percent of businesses with less than $1 billion experienced payment fraud attempts.

Business e-mail compromise (BEC) attacks—schemes that use bogus e-mails to trick businesses into initiating payment—account for a growing share of payment-fraud attempts. A staggering 80 percent of organizations reported BEC fraud attempts last year with 54 percent of organizations suffering financial losses as a result of BEC, AFP’s Payments Fraud and Control Survey found. A single BEC scam can result in losses of more than $1 million for a medium-sized business, per AFP.

While the percentage of businesses exposed to check fraud declined slightly in 2018, AFP finds that checks continue to be the payment method most impacted by fraud.

All told, 75 percent of global senior executives surveyed by Kroll say their organization has experienced some type of fraud, whether it’s insider fraud or supplier fraud. Each year, corporate America loses the equivalent of five percent of its total revenues due to fraud, studies show.

A lot of this fraud can be directly attributed to employees. In fact, the longer a fraudster is employed with a company, the more money they tend to steal studies show. What’s more, most of the external individuals who perpetrate fraud against a company are somehow connected to the company in some manner, either as a sales agent, client, service provider, or other partner, studies show.

It is no surprise that businesses are making investments in security tools to combat fraud.

Investments in firewalls, malware detection and other security tools are a good start to managing these risks. But to mitigate their risks, businesses also must rethink the accounts payable processes. Why Accounts Payable is VulnerableFraud can have a huge impact on a business:

  • It chips away at corporate profitability.
  • It jeopardizes your corporate reputation.
  • It consumes staff time with remediation.
  • It erodes the trust of your trading partners.
  • It puts your business’ viability at risk.

A single fraudulent incident can consume weeks of a finance team’s time as theydetermine the impact, attempt to recover the funds, plug security gaps, and work torepair reputational damage.

Mitigating the risk of fraud and data breaches is a majorundertaking—and an increasingly big headache—for thoseresponsible for an organization’s financial well-being.

Regardless of your infrastructure, manual and semi-automated accounts payable processes leave finance organizations extremely vulnerable to fraud, intrusions and data theft in several ways:

  • No tracking of document history and approvals
  • No way to ensure that employees adhere to approval policies and separation of duties
  • No chain of custody assurances
  • Audit information that is not readily accessible
  • No way to prevent documents from being discarded or destroyed ahead of deadlines

Making matters worse, accounts payable departments that rely on manual and semi-automated processes don’t have the real-time visibility into their financial data to tightly control their risks:

  1. Key information is not captured.
  2. Data is poorly organized.
  3. Information is not timely.
  4. Systems are badly integrated.
  5. Decision-makers cannot access key variables.

That’s why 24 percent of all fraud cases are the result of billing schemes that could be prevented or detected by sound vendor master database controls and other reporting and visibility measures, per the Association of Certified Fraud Examiners. And that’s why audits might induce feelings of nausea!

The Benefits of Accounts Payable Automation

Finance executives have had enough. Eighty percent of finance executives tell Accenture that they are “concerned” or “very concerned” about their organization’s compliance and security risks.

This is no surprise when you consider that CFOs and other leaders are responsible for the company’s financial health. That means that CFOs are explicitly involved with any losses caused by fraud. This puts CFOs on the frontline of fighting against fraud. And if a CFO is going to be effective in leading the fight against fraud, they will need to adapt their defenses to face new and more aggressive forms of fraud and fraudsters who are better organized and more technologically proficient than ever.

Nine percent of accounts payable leaders identify security and compliance as their top improvement priority, per the Institute of Finance and Management (IOFM).

This is where accounts payable automation comes in. Combining an accounts payable automation with state-of-the-art security tools enables organizations to mitigate fraud and data theft risks.

Accounts payable solutions incorporate four technologies that are critical to combatting fraud:

  1. Big data enables handling vast volumes of information, often in real-time.
  2. Machine learning is a component of artificial intelligence in its broader meaning, seeking to create and use algorithms to obtain predictive analysis based on data. Together, they make it possible for the company to go even further, such as risk scoring its clients and suppliers.
  3. Digitization, or automation, technologies that leverage artificial intelligence are the other essential tool and an important part of any effort to mitigate risks.
  4. Cloud accounts payable solutions ensure that only managers assigned a login can access sensitive documents. Cloud-based accounts payable solutions also are very difficult to hack. Additionally, approving managers can see where the document is in the approval process and a history of who has accessed the document, allowing an additional check and balance.

By creating and organizing a rigorous process that includes complete traceability and security, automated accounts payable solutions have become extremely effective in fighting fraud.

For instance, accounts payable solutions can spot fake invoices from “real” suppliers. In a purchase-to-pay workflow approval process, the purchase order is imported from the enterprise resource planning platform. The accounts payable solution then matches the purchase order to the invoice. Since the fake invoice will not have a purchase order to match against, a user will be alerted.

Fifty-five percent of finance organizations are investing in digital solutions to mitigate fraud and compliance risks, Accenture reports.Mitigating the risks of fraud with automated accounts payable technology delivers big benefits:

  • Less risk of financial loss
  • Reduced operating costs
  • Competitive advantage
  • Improved brand image
  • Stronger employee morale

The Bottom Line

There is too much at stake for organizations to leave themselves vulnerable to fraud. A single incident of fraud could cost an organization big money, waste employee time, damage its reputation and strain its relationships with internal and external stakeholders. Investing in security tools such as firewalls and malware detection software isn’t enough. Automating accounts payable with a cloud-based solution that includes advanced technologies provides the upper hand against bad actors.

Download the complete Game of Fraud: Return of the CFO whitepaper.

About Yooz

Yooz provides the smartest, most powerful, and easiest-to-use cloud-based Purchase- to-Pay (P2P) automation solution. It delivers unmatched savings, speed, and security with affordable zero-risk subscriptions to more than 3,000 customers and 100,000 users worldwide.
Yooz’s unique solution leverages artificial intelligence and RPA technologies to deliver an amazing level of automation with extreme simplicity, traceability, and end-to-end customizable features. It integrates seamlessly with more than 200 financial systems, exceeding any other solution on the market.
Yooz is a fast-growing, award-winning company that perfectly fits the expectations of mid-size organizations across all sectors. It has been recognized as a SaaS innovator, recently named as a 10 Best Cloud Solution Provider of 2018 by Industry Era, Best of SaaS Showplace (BoSS) 2018 by THINKstrategies, Top 10 Accounting Solution Provider by CFO Tech Outlook 2018 and 2019, and 2017, 2018, and 2019 50 Providers to Watch by Spend Matters.
Yooz North America is headquartered in the Dallas, Texas metropolitan area with global offices in Europe.
Visit us at GetYooz.com.