The disruption caused by the COVID-19 pandemic has forced businesses into making changes to their processes. But in some cases, this has increased company vulnerability, particularly to threats like invoice fraud with opportunist fraudsters taking advantage. However, companies that have embraced AP Automation find themselves better protected against fraud.
Invoice fraud has been growing in recent years. In fact, according to a survey carried out by UK Finance, UK businesses lose around £93 million (€100 million) every year to invoice fraud. The research has always shown that 43% of UK businesses are unaware of invoice fraud, despite more than 3,000 invoice and bank mandate scam cases being recorded in 2018.
While companies commit considerable investment to protecting against digital threats, and adhering to GDPR obligations, there is clearly still a need to protect against more traditional financial scams. In the case of invoice fraud, investing in a reliable automated AP system can help companies greatly lower their vulnerability to this kind of crime.
How Does Invoice Fraud Work?
A well-executed invoice fraud scam can be very difficult to detect. It comes down to a third-party submitting a fake invoice to a company in the name of a known supplier and waiting to be paid. The company believes they are legitimately paying for goods or services received, so it can often go unnoticed.
It might seem like fraudsters are chancing their luck, but those who carry out invoice fraud spend a significant amount of time researching companies before identifying their next victim. In fact, according to a study by the Association of Certified Fraud Examiners (ACFE), fraud schemes can take an average of 16 months between initial research and carrying it out.
A key part of their research is identifying the company’s regular suppliers and their typical invoicing patterns. The fake invoices seem to come from a genuine supplier, so no questions are likely to be asked.
Process Weaknesses That Boost Invoice Fraud
There are four weaknesses a company might have in their AP processes that could play not the fraudsters’ hands:
Each of these weaknesses are typical of manual accounts payable processes. They are paper based, have multiple approval levels and often lengthy verification processes.
How AP Automation Deals With The Problem?
AP Automation is an effective way to combat invoice fraud because it eliminates the manual processes fraudsters take advantage of. There are five principal aspects that help to protect businesses:
In essence, AP Invoice Automation can assist with Fraud Mitigation in your business by implementing control features that offer a greater level of transparency and accountability in your processes.
Kefron’s Automated Accounts Payable solution, Kefron AP, identifies discrepancies between invoice data and supporting documentation, creating a more robust AP controlled environment and reducing fraud risk to a minimum. Book a demo today to learn more.