How to Detect Fraud Transactions in Accounts Payable

  • 21 Jun 2022
  • AP Automation
How to Detect Fraud Transactions in Accounts Payable Image

Fraud costs businesses in profits and brand reputation. In some instances, the losses are irreparable or take years to recoup. Therefore, learning how to detect fraud detection in accounts payable is crucial to continue timely production.

Outdated manual processes leave room for fraud. Cloud automation provides a secure and collaborative environment in an international business climate dependent on remote workers. Discover the role AP automation plays in detecting and eliminating fraudulent activity.

How is transaction fraud detected?

AP transactions should be visible and transparent to eliminate fraud. Transaction fraud is typically detected through employee tips, internal audits, management reviews, and accidental discovery. Organizations can also conduct external audits to detect and eliminate occupational fraud, such as billing schemes, expense reimbursement schemes, and check tampering.

Organizations need specific policies and protocols for management and employees to follow when discovering fraud so everyone knows the proper course of action. Cloud AP automation eliminates fraud with customized access and checkpoints. As a result, the team can track transactions in real-time to detect fraud before it becomes a significant and costly problem.

Identifying fraud in accounts payable 

Once organizations create policies for identifying and reporting fraud, it is crucial to know how to identify fraud in accounts payable. The team should closely analyze certain transactions to ensure they are valid and not fraudulent, including: 

- Duplicate payments
- Fuzzy matching 
- Rounded invoice amounts
- Supplier with a mail drop as an address
- Invoices just below approval 
- Check theft search
- Above-average payments per supplier 
- Abnormal invoice volume activity
- Vendor employee cross-checking 

Manual processes leave room for human error and fraud. Additionally, the time-consuming nature of manual fraud checking can add up to significant losses over a short time. AP automation provides real-time updates to detect fraud faster and helps management realize a measurable ROI within the first year of implementation. 

 

Additionally, organizations protect their brand reputation by eliminating fraud. Companies associated with the fraudulent activity may find it challenging to regain trust and rebuild their brand. Adopting complete cloud automation in accounts payable helps protect organizations from fraud and related brand damage. 

Eliminating accounts payable fraud

Accounts payable fraud can be eliminated through early detection, establishing standard policies for reporting, and implementing AP automation. Additionally, relationship building between management, employees, and suppliers encourages trust and honest behavior to deter fraudulent acts. Steps to avoid the misery of unmitigated fraud include:

  • Validate important vendor data.
  • Establish a system of checks and regulations.
  • Use anomaly detection technology.
  • Leverage end-to-end invoice through payment automation.

With continued cloud access to data through automation, fraud detection is easier and faster. Also, reporting and supplier onboarding are quicker and more efficient, so the team can make necessary decisions when it matters most.

Learning how to detect fraud transactions and prevent them is critical to an organization’s overall success. The Association of Certified Fraud Examiners (ACFE) estimates that 5 percent of revenue is lost due to occupational fraud. Investing in automation eliminates fraud through prevention and early detection. Contact the professionals at Medius today to learn more about how to detect fraudulent transactions and the important role automation plays.

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