The rising fraud challenge in modern Accounts Payable
AP teams face high invoice volumes, tight deadlines, constant supplier changes, and regulatory scrutiny.
Unfortunately, these pressures make it easy for fraudsters to take advantage. Fraud has become more sophisticated. There are many routes fraudsters can take to steal money from an organisation. Invoice manipulation, alterations to supplier bank details, duplicate invoices. And now? The most convincing impersonations made with AI voice cloning technology. These threats make AP automation and proactive fraud prevention essential for finance teams.
Accounts payable fraud prevention is a priority, thanks to ECCTA law which made failure to prevent fraud an offence.
Over 2 million reported fraud cases between January and June this year in the UK, rising 17% (UK Finance). Organisations report they lose 5% of revenue to fraud each year (Association of Certified Fraud Examiners). Finance teams should remain vigilant.
Basic fraud controls are now too easy to bypass, and rudimentary fraud controls are no longer an option. It’s necessary to perform checks on every transaction and supplier. To pay suppliers on time, automation is a critical part of a fraud prevention framework.
What AP automation means
Accounts Payable Automation is the use of technology to streamline manual AP tasks. This involves tasks such as invoice intake, validations, matching and approvals. Specific examples of this are: Automated statement reconciliation, duplicate detection, and invoice data extraction.
Many view automation as a method to increase efficiency. But the benefits also include greater ledger accuracy, increased oversight, tighter processes and simpler workflows.
Why AP automation helps protect against fraud
Fraudsters constantly invent ways to swindle unsuspecting companies, and it’s getting harder to spot. With few resources and high workloads, finance teams find fraud controls hard to manage.
Automated controls close gaps humans can’t catch
Humans are fallible, and it’s difficult to spot every pattern or stay always alert.
Automation monitors with consistency, continuously examining data, validating fields, and flagging mismatches or suspicious details, but far faster.
This removes reliance on memory, experience, or busy staff noticing unusual patterns. It creates time and improves accuracy.
This is valuable for organisations with large supplier bases and high invoice volumes, where monitoring for fraud is key.
Reduced manual processing = fewer opportunities for fraud
With AP automation, you can reduce opportunities for internal and external fraud. A secure supplier portal makes it difficult for invoices faked by outside parties to enter your system. Fewer human touch points give fewer opportunities for unauthorised changes to supplier information. Automated pre-payment controls ensure risky changes are caught before payment.
Accurate detection of duplicates and suspicious activity
Purpose-built risk control software detects anomalies in your ERP or ledger. They run extensive tests to identify issues like duplicate invoices, inconsistent POs, rounded values, transaction spikes, and inconsistent invoice amounts. These checks support stronger fraud prevention without adding extra work for the team.
Best in class software uses AI to further interrogate data, finding unusual patterns across time. An example being an invoice submitted at an unusual time for that supplier.
Finance risk analysis prevents deliberate manipulation, and accidental errors. This allows for fraud protection, overpayment prevention and greater ledger accuracy.
Stronger internal controls and segregation of duties
Automated workflows enforce approval hierarchies, especially those where more than one person approves. This means no shortcuts, circumvention or inconsistency with checks – everything gets oversight. Audit trails are also generated, showing management who has made changes, and when. This doesn’t just catch out fraudsters, it also deters potential fraudsters.
Better visibility into supplier risk
Automation can validate supplier data at onboarding, and beyond.
A PPN survey found that 35% of organisations check their suppliers either never, on an ad hoc basis, or every 6 months, which poses a serious fraud risk.
This supplier master file is in a constant state of change with updates and new suppliers. If it is not regularly checked, duplication and irregular formatting become commonplace. Yet many organisations wait until audits to clean their master file.
Automation can pinpoint these problems. This enables teams to maintain the file without needing to check individual suppliers.
The organisational impact of fraud control automation
Automating AP can reduce the risk of fraud and deliver broader benefits:
Lower cost of errors and reduced cash leakage
Automated controls mean fewer mistakes, and more proactive method. Accurate payments save time as there are fewer issues to investigate. That means fewer recoveries, too.
Audit-ready compliance
Digitisation ensures traceability of all actions, not just fraudulent ones. This supports statutory regulations and makes audit cycles smoother.
Protecting financial integrity and reputation
Faster processes and proactive monitoring improve external perception. Faster payment processing means fewer exceptions and supplier queries, saving time in the P2P process. Fast, uncomplicated payments = happy suppliers. Automated controls increase accuracy, which ensures confidence in financial reports to the board. Fraud detection automation mitigates the risk of paying fraudulent entities. By doing so, you protect your organisation’s reputation.
What best-in-class AP teams do next
Best-in-class teams go beyond basic automation and adopt systems that optimise workflows. Not all AP automation is equal. Basic automation, like 3-way matching, only catches surface-level issues.
Stronger platforms can identify several far more complex, or subtle, fraud indicators. An AI solution. for example, can accurately identify unusual patterns of behaviour in supplier invoices. Those anomalies may not be detectable in rule-based automation.
However, not everything ought to be automated. As tempting as a no-touch process sounds, without full context or correct source information, systems can make errors.
Finance teams should still be in control of the decisions. AI and automation can complete processes with accuracy and speed. People can provide the judgement and context that technology may not have access to.
AP automation is now essential to watch for fraud. But together, humans and technology can create effective fraud prevention.
We give you the tools to be able to do that – why not take a look?
How Finance and AP teams can strengthen their fraud prevention strategy today
Fraud risk is growing faster than manual processes can handle, so AP automation is fundamental. The strongest fraud defences combine specialist tools with human oversight.
Here ‘s how you go that one step further with your AP fraud controls:
- Standardise and automate core invoice workflows and approvals.
- Establish clear escalation processes for exceptions.
- Put further controls in place for fraud indicators, with AI-driven risk analysis.
- Strengthen supplier master file verification.
