Prior to the coronavirus pandemic, fraud was a serious issue facing businesses. In fact, according to a 2018 survey conducted by the Association of Certified Fraud Examiners (ACFE), the world’s largest anti-fraud organization, the total profit loss caused by the cases in their study exceeded $7.1 billion, representing only a tiny fraction of fraud globally.
Unfortunately, Bruce Dorris, the President and CEO of the ACFE is calling the coronavirus pandemic a “perfect storm for fraud.” An ACFE survey following the 2008 financial crisis found 80% of those surveyed believed fraud increases in times of economic stress. Here are some tips on how to reduce the risk of fraud at your company:
Be Wary of the Heightened Risk of Internal Fraud
The first step in protecting your business against fraud is acknowledging the heightened risk and where you could be vulnerable. The ACFE’s 2019 survey found that more than 2 out of 5 people who commit occupational fraud are living beyond their means, and more than 1 out of 5 is experiencing financial problems. With millions of Americans filing for first-time unemployment and having to face an average cost of $30,000–some of which will likely not be covered by insurance–if a loved one is hospitalized for COVID-19, many families are really hurting. Unfortunately, this could potentially increase the risk of fraud.
Don’t Cut Resources Committed to Fraud Prevention
With companies across the country struggling to make ends meet, many are looking at ways to cut costs. Although reducing expenditures on anti-fraud controls may seem like something you can easily cut when budgets are tight, the ACFE’s 2019 Report to the Nations found organizations typically face a 5% revenue loss due to fraud and abuse. Their follow up survey for 2020 found companies that failed to invest in internal controls had significantly higher financial losses and were slower to identify costly fraud schemes. As put by Bruce Dorris, “I can confidently say that now is the time for organizations to be bolstering their internal controls, not cutting them.”
Cut Costs and Reduce the Risk of Fraud with AP Automation
Luckily with AP automation, you can both decrease business costs and reduce the risks of fraud. In fact, manually invoice processing costs 3x as much as using an automated system. However, according to a survey on a recent MetaSource webinar, 4 out of 5 of accounting professionals said 75-100% of their invoices are still processed manually, while the other 1 out of 5 said manual processing is used for 51-75% of their invoices.
Risk mitigation in your accounts payable process starts with an outsourced mailroom – the first step in automating invoice processing. Your incoming invoices will be received by a digital mailroom partner, scanned, indexed, and electronically distributed to your staff wherever they are working. With AP automation, you control who receives, reviews, and approves an invoice based on your business rules. A dashboard provides you with real time insight into the accounts payable process and can help you plan cash flow needs. Additionally, accounts payable tracking reports provide audits on who did what with every invoice, further minimizing the risk of fraud. Any changes in your organization such as staffing, business rules, vendor relationships, etc. can be adapted easily and quickly with accounts payable automation.
With MetaSource’s AP automation, you can reduce the risk of internal fraud by monitoring staff actions taken on any invoice, implementing three way matching, initiating duplication alerts, and gaining insight into the process including who approved any invoice. You can also automate the payment of your invoices, which prevents errors through verified vendor enrollment, notifies you if there are fishy duplicate payments, and enables an external third-party support staff to help with vendor payment processing. In addition, using AP automation software and cloud storage means if you are audited, your staff can pull up all necessary documents quickly and easily and with a clear transparent income trail.
Fraud–on the rise due to the current pandemic–is among the most ubiquitous and damaging risks facing businesses of all sizes. It’s also among the easiest to perpetrate. Automating the accounts payable process from receipt through payment minimizes that exposure. Lastly, when working with an account payable partner, make sure to choose a partner with SOC 2 Type 2 protocol for security and confidentiality. To learn more about MetaSource’s advanced AP automation solution, check out MetaSource’s website or speak with a specialist at 888.634.7684.