Touchless AP Feeding The Fraud Beast
02nd December 2019
The increase in the frequency, types and cost of invoice fraud (£93M in 2018), puts greater pressure on governance and control as the ‘eyes-on’ approval process is limited to spot checking invoice exceptions.
Every organisation we speak to firmly believe that they have the systems and processes in place that ensure they don’t carry any financial risk, that they cannot be tricked into paying a fraudster. But in reality, the challenges, stresses and conflicting priorities of today’s businesses make it easy for fraudsters to gather enough tangible information about their targeted organisation to pose convincingly as their supplier. In some cases, receiving multiple payments before the fraud is discovered or when the legitimate supplier complains about non-payment of invoices. At this point, the recovery and return of funds from the fraudulent account is virtually impossible.
According to Crowe Financial Report, published by the University of Portsmouth, ‘Since 2009, losses owing to fraud have risen by 56.5%’.
Using technology to Reduce the Risk?
Digital Transformation holds one part of the key, offering seamless, touchless order processing and payment transactions, so that the incidents of manual handing errors are removed. However, this can then open up the risk of loss through cybercrime and spoofing, organisations are struggling to keep up with the sophisticated nature of invoice fraud attacks.
In many industries there is an expectation that duplicate payment and credit processing is a standard part of the AP, however this is where fraud and error can hide. Processes and technology are in place, but we all know that over time, controls laps and processes change slightly, especially when there is a high turnover of staff.
Some legacy practices such as simple 2-way or 3-way matching (of purchase orders, invoices, or delivery receipts) can provide some security, but is useless if your organisation processes 100’s of invoices a week and the fraudulent change has been made to the Master Supplier File.
Fighting the battle of payment error
Holding the full set of keys, checking the checker, being able to have the final go/no-go on a payment run really does provide the assurance across the business that the finance controls are robust and delivering value.
We find that our customers see results within days, have the confidence to promote best practice and payment governance.
Our NXG Forensics® solution reviews 100% of a client’s payment transactions prior to payment being made. We continuously identify a multitude of P2P anomalies (supplier file changes, PO errors, duplicate invoices and fraud) that require further investigation. Utilising any ERP system data on a daily basis, our solution provides the results of complex analysis and financial logic in understandable and easy to act upon dashboards, along with the option to validate or rectify anomalies, we also highlight areas to investigate such as fraud risk.
Nobody wants to believe that they are still processing errors, especially after major investment in finance systems. However, no organisation can fully safeguard their profits, unless they continuously monitor their spend.