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AP and Purchase to Pay Automation – Helping Detect and Prevent Payment Frauds

The fast-paced rise in digital invoicing and payment methods has paved the way for lucrative business opportunities. With technological advancements, modern businesses are experiencing efficiency gains and flexibility. Despite the improvements around payables, fraudulent and criminal activities are increasing at an alarming rate. Thankfully, Accounts Payable (AP) and Purchase to Pay automation can help optimise efficiency as well as combat the risks of fraud.

According to a survey report published by the Association for Financial Professionals in 2018, payment fraud had reached its peak in 2017. Further statistics predict that payment fraud will potentially hit record highs in the future, posing a serious threat to organisations globally. As such, it has become more important than ever to implement systems and practices that help protect a company’s cash flow and documents from potential criminals and fraudsters.

Ideally, the risk of fraud or unscrupulous activities is two-fold, i.e. it may come from both internal and external sources – employee travel expenses, rent payments, vendors, third-party suppliers, etc. One of the most effective ways to address this is by automating your Accounts Payable and Purchase to Pay system. It helps organise, monitor and control all these activities seamlessly, allowing CFOs and your AP staff to get real-time updates and reduce the risks of fraud.

What is Accounts Payable Automation?

Accounts Payable (AP) automation involves optimising and automating the complete process of handling and receiving supplier invoices. This helps digitise the entire process and reduce the chance of errors or frauds through human effort. Discussed here are the benefits of AP automation:

  • The automation mechanism helps capture all your invoice data electronically, regardless of which format your suppliers send it. Through image processing, you can convert all types of invoices and documents in electronic format. This helps prevent human errors and deter acts of fraudulence through effective website and document management.
  • It helps streamline the entire AP process, eliminating redundancy by taking every task digitally. This helps identify potential threats in the process, reducing risks.

What is Purchase to Pay Automation?

Purchase to Pay (P2P) is the process that involves every activity beginning with an order and ending with payment being done – placing order or requisition, purchase, receipt of goods and payment. Thus, P2P involves multiple people and processes. It also combines Accounts Payable and procurement. Therefore, the entire process is cumbersome, complex, time-consuming and full of risks.

Automating Purchase to Pay can help increase transparency, detect potential sources of fraud or errors and be more efficient. The benefits of P2P automation are:

  • It helps reduce payment cycle time, transforming a daunting process into a valuable business opportunity
  • Digitization of P2P processes helps build better collaboration among teams
  • Aids in data-driven decision making, delivering value at the enterprise level

Secure Your Company’s Wealth through AP and P2P Automation

To deter accounting fraud, organisations must invest in high-end security systems. AP and Purchase to Pay automation help to secure your company’s wealth by allowing you to facilitate vendor screening against payment requests and inbound invoices. The auto mechanism will instantly flag any data that does not match with the master data. Furthermore, regular AP reports help CFOs and managers monitor bulk transactions passing through the Accounts Payable, and suppliers that get frequent payments.

Identifying Fraud

Detecting fraud amid thousands of business transactions can be time-consuming and cumbersome. Thankfully, automating your Accounts Payable and Purchase to Pay processes can help identify potential threats and prevent them before your company’s wealth is impacted.

Through automation, you can set up automatic check whenever a new vendor is added within the system. Create a gateway that thoroughly screens and verifies every vendor from possible billing schemes. Make sure this task is performed by a top-level manager or anyone who is not responsible for initially adding vendors into the system. Identify potential red flags when adding a new vendor. These may include duplicate vendor profile, missing or false contact information, etc.

The standard reconciliation of accounts through an automated process can also help detect and monitor unsolicited activities. The month-end closing period becomes more streamlined and efficient, allowing your Accounts Payable and P2P team to perform quick checks through the entire system and identify anything suspicious. The key areas of fraud detection should be chequebook transactions that do not match AP entries. Furthermore, gaps in invoice numbers, payments with round figures or unscrupulous payment frequencies can be verified through the automated process.

AI Technologies Help Detect & Prevent Fraud in AP and P2P Processes

Highly functional Accounts Payable and Purchase to Pay automation systems leverage the power of Artificial Intelligence to make processes more reliable and secure. For instance, using metadata and steganographic shape analysis can help identify unscrupulously “modified” data on an invoice by tracking down the changes that are made in an image. This is one of the best ways to identify frauds through falsified information done by making changes in an image, such as names, dates or amounts.

Working on powerful algorithms, AI in Accounts Payable and P2P automation systems can adapt to most types of documents and build their knowledge base by gaining insights from examples. For instance, AI-powered statistical analysis can help identify discrepancies in monetary amounts by matching invoices and documents with historical data of the supplier.

Alerts can then be sent to CFOs or AP managers notifying the amounts that are found to be greater than usual. AI technology also helps identify potential duplicates, i.e. detecting invoices that have the same supplier names and numbers. A good AP and P2P automation system is one that allows you to detect all interventions and unsolicited activities, such as modified values, dates, and even the persons who made such changes.

Conclusion

Frauds and discrepancies in Accounts Payable and Purchase to Pay systems are typically unavoidable for any type of business. Thankfully, automation can add a layer of security, providing organisations with the tools to streamline their processes, identify threats and prevent them at the core. Thus, Accounts Payable and Purchase to Pay automation can help organisations function in a more reliable and secure environment.

A post by Kidal D. (4690 Posts)

Kidal D. is author at LeraBlog. The author's views are entirely their own and may not reflect the views and opinions of LeraBlog staff.

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