How to fend off accounts payable fraud schemes (cyber infiltration)

  • 11 May 2020
  • AP Automation
 How to fend off accounts payable fraud schemes (cyber infiltration)  Image

Watching for fraud at all times in accounts payable is crucial, especially during times of cyber infiltration, such as the current pandemic. Early detection of fraud helps companies reduce losses, protect their reputations, and improve revenues..  

A worldwide crisis such as a natural disaster or pandemic provides a climate of confusion. Fraudsters and scammers seize the opportunity to capitalize on gaps that might not otherwise exist. Organizations need to have systems in place to update all pertinent financial data in real-time and combat potential fraud. Having AP automation and streamlined accounts payable processes in-place makes it easier to detect fraud, even during times of crisis. 

International issues during a pandemic 

A global crisis rings out around the world, causing concern to spread far and wide. With this uncertainty comes an increase of international cybercriminals looking to capitalize on the situation while people are distracted.  Malware, phishing, false personas and computers used remotely that might not be properly tested are all causes for corporate concern as people work from home and use online accounting processes during the quarantining.  

Stressed workers and an overworked IT staff can cause vulnerabilities hackers try to exploit. Remote work can give hackers additional ways to infiltrate networks and exploit private data while the team is concerned about the coronavirus. Cloud AP automation provides a secure environment where everyone can work anytime and anywhere in real-time. Ongoing updates and communication via AP automation is one of the best ways to fight fraud, including applicable tax and regulatory fraud, during the hectic days of the pandemic. 

The scammers come out during coronavirus 

The U.S. Secret Service has found a variety of scammers during the panic of the pandemic, including malware distributors and email phishers. Cybercriminals widely distribute mass emails with an attachment or link that, when opened or clicked, causes malware to infect the system. Other emails attempt to get the recipient to enter their email login credentials to harvest private data. Amidst the pandemic, many scammed pose as legitimate health care organizations providing information about the coronavirus. Management and employees need to identify potential fraud that can cause damage to a company’s reputation and lead to lost profits and business relationships. 

With people around the globe working from home during the pandemic, companies are concerned about accountability, privacy, security, and employees’ actions. According to the 2019 B2B Payments Survey Report, 44 percent of companies have faced a B2B payments fraud attack in the past year, with 25 percent experiencing a loss. The data revealed the source of most of these losses was accounts payable, with 56 percent of all payment fraud types that ended in a loss related to AP.  

Achieving optimum security in accounts payable 

Beyond streamlining operations, AP automation is now viewed as an essential way to combat fraud. Accounts payable automation provides transparency into AP operations, so everyone from the CFO to the AP staff can instantly access the latest data, reducing the chance of fraud. Robust automation solutions can combat the six significant types of fraud in AP, including: 

  • Fake suppliers with names that sound like real companies who hope the A team processes the invoice for payment before detection. With AP automation, no payment executed offline by direct entry or check can happen without first being approved through a rule-based workflow, which includes a vendor verification process. 
  • Duplicate and multiple entities sending identical invoices that result in duplicate payments. AP automation provides automatic detection of duplicate invoices. 
  • Check fraud is when a fraudster steals a paper check in transit and uses a fake ID to clear it. Electronic payments eliminate this type of fraud. 
  • Acquisition and CFO fraud is when a fake email is sent to someone in the finance team that contains a history of dialogue between the CEO and CFO about an acquisition about to close, and a sum of money to be sent to an offshore account with an urgent timeline. With accounts payable automation, no payments are made based on email as an established, standardized payment approval process is in place. 
  • Inside theft occurs when a supplier works with the same AP clear to process fraudulent invoices, with both disappearing before the fraud is caught. However, AP automation deters this activity with rule-based vendor verification and delegation of authority, automatic rules, and a full audit trail in real-time. 
  • A CEO who abuses his or her authority by paying themselves or a close ally company large sums of money for consulting services. AP automation provides a complete audit trail to shed light on these dark actions on behalf of management. 

Once fraud is detected, report it to government agencies to help protect the company, its reputation, and its clients. Past acts of fraud, such as Enron, have taught corporate managers to watch inside and outside operations carefully, especially during the mayhem of a pandemic. AP automation provides transparency and real-time updates to catch fraud before incurring significant losses. 

Taking it to the cloud 

Maintaining privacy and security is crucial, especially during a pandemic when employees are working remotely. AP automation helps organizations establish and maintain the highest levels of security to protect sensitive financial data. Areas of focus include privacy and data security, fraud, scams, network security, website security, email security, facility security, payment cards, employees and operations, and mobile device security. Cloud AP automation creates a secure environment where everyone works in real-time regardless of location. When everyone returns to work in a single office setting, all levels of security are easily addressed and maintained. 

Companies that already invested in cloud AP automation are seamlessly able to support the remote working conditions required during the pandemic. Small businesses are also discovering the advantages of cloud automation, especially in the financial and AP departments. Working in the cloud also ensures everyone from the C-suite traveling for business to an AP professional attending a child’s show can stay in touch with the latest financial data remotely. Keeping a finger on the pulse of AP data also makes it easy to detect and eliminate acts of fraud

Quickly identifying and eliminating fraud helps businesses protect their reputations and boost the bottom line. AP automation plays an integral role in reducing fraud and supporting remote workers during a pandemic, natural disasters, travel, and working at home. 

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