5 key measures and strategies for AP fraud prevention
Accounts Payable (AP) fraud is a serious issue that can significantly impact a
business. It is defined as any illegal or unethical activity aiming to gain
unauthorised access to or misuse of an organisation's funds or assets.
AP fraud can take many forms, including false invoicing, fake suppliers, and unauthorised payments. In this article, we will discuss ways of preventing fraudulent activities in accounts payable and how AP automation, such as Ocerra, can be a valuable tool in this endeavor.
Preventing AP fraud is essential to ensure a business's financial health and
stability. One of the most effective ways to prevent AP fraud is by implementing
internal controls and financial processes. This includes having clear policies and
procedures in place for the approval and payment of invoices and regularly
reviewing and monitoring transactions for any suspicious activity.
Establish the segregation of duties
One of the key internal controls that can be put in place to prevent AP fraud is
the segregation of duties. This means separating the roles of the individuals who
are responsible for approving invoices, processing payments, and reconciling
accounts. Separating these roles makes it more difficult for an individual to
commit fraud without being detected.
AP automation plays a pivotal role in facilitating this segregation. With AP automation systems like Ocerra, you can provide setup role-based access, enforcing separation of duties by design. This not only enhances security but also improves efficiency in the accounts payable workflow, reducing the risk of fraudulent activities.
Establish & implement the approval process
Another important step in preventing AP fraud is to implement an invoice
approval process. This includes having a clear process in place for the approval
of invoices and ensuring that all invoices are properly reviewed and approved
before payment is made.
With AP automation systems like Ocerra, the approval process can be streamlined and automated, ensuring that the right individuals handle specific tasks.
Employ Purchase Orders to protect your payables
Implementing Purchase Orders (POs) is a robust strategy in the fight against AP fraud.
POs serve as a documented agreement between the buyer and the supplier, specifying details such as product or service descriptions, quantities, prices, and delivery terms. By requiring a PO for each purchase, companies establish a clear paper trail that can help prevent fraudulent activities.
Any invoice that arrives without a corresponding PO can be flagged for review, reducing the risk of false invoicing or payments to unauthorised suppliers. Additionally, AP automation solutions like Ocerra enhance this process by seamlessly importing POs and Receipts from MYOB, automating the matching of invoices with POs and Receipts.
Ocerra not only streamlines this integration but also offers standalone, easy-to-use and implemented PO functionality for businesses looking to strengthen their AP processes and further bolster their defences against fraud.
Verifying suppliers' bank account details
Verifying bank account details is crucial for the AP team due to its pivotal role in preventing fraud and financial discrepancies. Ensuring that bank account information on invoices matches supplier records in the ERP system is a fundamental security measure. It guards against fraudulent activities, such as unauthorised changes to payment details, which can lead to financial losses and disrupt operations.
Ocerra is extracting and checking bank account details from invoices with supplier information imported from your ERP system. This functionality flags the details that do not match your ERP details, helping businesses mitigate potential risks and strengthening the security of their accounts payable processes.
Ensuring the accuracy of tax numbers
Verifying tax numbers is a critical task for the AP team, playing a key role in maintaining financial accuracy and compliance. Ensuring that tax numbers on invoices align with supplier records in the ERP system is a foundational measure to prevent discrepancies and financial inaccuracies. This verification process safeguards against potential issues, such as incorrect tax reporting or violations of tax regulations, which could result in penalties or legal complications. In essence, thorough tax number verification contributes to the overall financial integrity and regulatory compliance of the accounts payable process.
In our commitment to enhancing AP security, Ocerra extends its scrutiny to tax numbers. We cross-check tax numbers on invoices with supplier data from your ERP system, ensuring each transaction aligns with tax regulations and the correct supplier.
Detecting discrepancies promptly, Ocerra enhances your defences against tax-related irregularities, providing thorough protection for your accounts payable operations.
The use of technology can play a key role in preventing AP fraud. Automated
AP systems such as Ocerra can greatly reduce the risk of fraud by providing real-
time monitoring and reporting of transactions and automating invoice matching
and approval. Additionally, many similar to Ocerra AP Automation software
solutions offer features such as data encryption, access control, and compliance
with industry regulations, ensuring sensitive financial information is protected.
In summary, preventing AP fraud is crucial to ensure the financial stability of a
business. By implementing internal controls, transparent policies, and
procedures and utilising technology, companies can reduce the risk of AP fraud
and protect their assets. Regularly monitoring transactions and keeping up-to-
date with the latest fraud prevention techniques can also help businesses stay
one step ahead of potential fraudsters. If you're interested in learning more about how AP automation software can help your business streamline its accounts payable process, we'd like to hear from you.
Please feel free to contact us with any questions or to schedule a demo of our software here.