US Businesses Lose on Average $300,000 Per Year Due to Invoice Fraud
Jacksonville, FL, October 5, 2022 - Invoice fraud is increasing. In the US companies are losing an average of $300,000 per business annually to fraudulent invoices. Even more shocking is the fact that one in four (25%) finance professionals are unaware or unable to even estimate the cost of invoice fraud to their business. This lack of visibility is likely due to the messy paper trails that continue to plague the invoice process.
Medius a leading provider of AP Automation and wider spend management solutions, today, releases the Financial Professional Census. The report examines the key challenges of finance teams in 2022: rising fraud, late supplier payments, strained relationships with procurement, and the retention of talent. The full report can be downloaded from here.
Jim Lucier, CEO, Medius said: “Invoice fraud is on the rise, while global supply chains are becoming more complex. Finance and AP teams face numerous challenges in an increasingly complex business environment. They need technology to move from automation to elimination – eliminating the invoice, fraud, and wasted time on needless manual tasks. As a technology provider, we still have work to do to help them solve these challenges and we’re 100% focused on doing just that.”
The blame game
This level of invoice fraud is a huge hit to the bottom line for businesses in the US, which means that AP teams are constantly under attack. Finance teams are spotting one invoice fraud attack every single month and that doesn’t include the fraud that slips under the radar. But who is to blame? Nearly half (49%) say that both finance and IT are responsible for preventing and reducing invoice fraud. And although it is viewed as a shared responsibility, only 18% of respondents are frequently collaborating on the issue.
Breaking down silos
It may be assumed that procurement and finance teams are working in lockstep, however the research revealed that nearly 1 in 5 (18%) say they do not work together at all. In fact, less than 1% say of financial professionals speak to their procurement team every day and 25% say they only speak once a week. Conversely, 1 in 5 say that in order to perform their jobs to the highest standard expected, they need to be working more closely with procurement teams. Respondents also say this disconnect results in lack of transparency when it comes to business priorities (48%), increased costs to the business (36%), and mistakes due to siloes working (31%).
Process for process sake
Finance teams are known, good or bad, for the processes they create and enforce for a business. However, according to the survey results, they are falling behind on payments with 32% saying that paying invoices on time remains the biggest challenge for their company. In fact, only 1% say invoices are paid on time, 100% of the time and only 8% are paid on time, 50% of the time. With an average of 23,000 invoiced processed per year, this can really add up!
Lack of technology could be to blame for this slowed pace. Nearly a quarter of respondents (24%) say that their software is inflexible and difficult to modify to unique business needs. 1 in 5 (22%) say that their software is very outdated and requires many manual actions.
Finance teams facing churn
Attracting and retaining talent has become a boardroom priority, as the Great Resignation sweeps across the globe. But according to the data, finance professionals are a particular flight risk. 24% say their finance department is so busy that they are concerned colleagues are on the cusp of leaving. Making the situation worse, one in five (19%) feel their job is dominated by monotonous and boring tasks that are demotivating to work on. For those teams that are using automated tools in payments, less than half (44%) feel they have been properly trained. Across the globe, the average tenure in the finance team is just 34 months.
Kevin Permenter, Research Director, Financial Applications at IDC comments: “For the past three to five years, we’ve seen finance and procurement teams play a game of ‘whack-a-mole’ as they respond to global economic fluctuations and the rapid digitization of processes. Not surprisingly, they are struggling to keep up with the ever-evolving shift in customer expectations, heightened risk and vulnerabilities, and challenges caused by global supply chain issues. It’s a tough environment for even the strongest of teams.”
About the data
Medius, in partnership with Censuswide surveyed 2,750 senior finance executives across major markets in North America, Europe and Asia. To ensure small operations didn’t skew the data, companies with less than 50 employees and those that process less than 5,000 yearly invoices were excluded. The average number of invoices processed by the sample each year exceeds 22,000.
About Medius
Medius links invoice capture, processing, and payment to replace the worry and wondering of managing AP with calm and confidence. Medius goes far beyond basic automation by using artificial intelligence to do most of the work – so invoices get confirmed, coded and paid; AP teams get to go home and rest easy; and businesses can trust their budgets and forecasts. Visit medius.com to learn more.