Inefficiencies in your business process will increase the risk of fraud. Organizations are likely to lose more in invoice related scams. This article talks about why invoice processing poses a challenge and how to protect the business from invoice fraud.
What makes invoice fraud challenging to manage? Invoices are one of the few areas that are handled with paper-based processes. Employees spend most of their time in outdated admin tasks, which include invoice processing. In most businesses, invoices are received as paper copies and this information needs to be manually checked or processed. Indeed, this is a slow and inefficient process, and that is why accounts payable teams are struggling to cope with the paperwork and combat fraud.
Invoice fraud comes in different ways in a company. The following are a few ways through which invoice fraud can occur:
Fake invoices can be auto-generated for products or services that haven’t been taken. A common strategy is to put pressure on the business to process the payment quickly. These invoices use the information directly from other invoices to create authentic invoices, making those difficult to detect. Automation can help flag invoice duplicates, which prevents paying for the same invoice again. The frequency of the invoice fraud makes it something that finance teams have to be vigilant; this also has a potential impact on your suppliers. Depending on the business type, the accounts payable department are responsible for processing legitimate invoices even from new suppliers.
Combating invoice fraud
Invoice process automation
The time you spent on transferring information from invoices to accounting systems is high and can be spent on other productive tasks. The automated invoice system eliminates 90% of the manual processes and allows you to scan documents using OCR technology and converts all the required information into the digital format. The solution performs real-time checks on each invoice and triggers an alert for any discrepancies found.
The purchase order adds layer of security to the invoice approval process. PO contains payment details, dates, and PO numbers for the requested goods or services. Cloud-based accounts payable software makes managing purchase orders easy and every invoice is automatically checked against matching POs. The solution can even keep track of PO history, making it easy for auditing.
Identifying abnormal patterns or payments is difficult unless you have an effective means to track the invoice activity. Leveraging digital technology makes this much more manageable with reporting tools allowing you to access the data. If you are receiving more number of invoices from a specific supplier for a particular category, you need to make sure costs are legitimate. Track supplier payments, get them paid on time, and leverage early payment discounts.
Tamper bank details
Fraudsters identify a supplier, hack their account details, and get money transferred to their account instead of the supplier. Fraudsters can determine the timing and frequency of supplier invoices so they can predict the patterns. Hacking company websites and email accounts can obtain this data. These invoices are auto-generated but take information from other emails to make it more authentic. Another way is to send phishing emails that can transmit ransomware to your machine. The finance department needs to check with the volume and frequency of the invoice fraud to combat. Accounts payable department is liable to process legitimate invoices from suppliers.
Whether you are paying more or less, always check the invoice information from a supplier. You have to carry out a thorough check of emails, addresses, and website links before processing payments.
Leverage Artificial Intelligence
The ability to check for duplicates and any mismatches can help avoid invoice fraud. Any discrepancies between the invoice data and supplier’s details should be identified to prevent invoice fraud from happening.
Technology can help improve the way the invoice is checked and approved without the intervention of the AP department. An automated system can keep track of invoice amounts and record who, when, and where an invoice has been approved.
In this way, you can fight against invoice fraud in your company. SutiAP’s robust features can help you detect invoice fraud at the early stage, so you don’t have to spend time verifying and validating invoice information.