Chief Financial Officers have always played a strategic part in managing risk in everything from clarifying and facilitating strategic decisions to sharing their in-depth knowledge of financial data analysis. Today the role has evolved, now adopting all of those skills and more in order to face the rising and deadlier forms of fraud. No longer just the better known, more traditional internal embezzlement from an employee or industrial espionage against a business, advances in technology have opened doors to new and creative means of threat from cybercriminals.
Fortunately, those same advances have created very effective technology tools to support your finance department’s fight against accounts payable fraud and fraudsters.
Why Managing Accounts Payable Fraud Risks is a Priority
When it comes to cybersecurity statistics, the numbers are far higher and more frequent than people imagine. In fact, chances are that people would be horrified if they knew just how many attacks are attempted daily, even if not all are successful. For example, according to IT chronicals, there are about 4,000 cyber crime attacks every day in the United States alone (globally, 30,000 websites are hacked daily) and every 40 seconds a new cyber attack starts. Now add to this that 43% of all cyber attacks are made on small businesses. Clearly the issue of fraud risk no longer belogs only to big organizations.
Number of attempts aside, the sheer amount of money lost to fraud is astronomical, reaching an estimated global loss equivalent to .127 trillion in 2019. However, despite this alarming figure, PricewaterhouseCoopers (PwC) confirms that only half of the companies surveyed say that they carried out a global risk evaluation regarding fraud over the past two years. And the Institute of Finance and Management (IOFM) reports that only nine percent of accounts payable leaders identify security and compliance as their top improvement priority.
Create Awareness Throughout the Company
Fraud attempts can be simple and straightforward, coming in many forms including duplicate invoices, incorrect data (such as ordering 100 items but only receiving 75), false expenses, and of course e-mail. The risk has only increased as more employees work remotely and both names and faces may be unfamiliar even to their teammates. Because of this alone CFOs and other finance leaders should make risk management and security against fraud a priority for their business. Management must take the time to communicate this commitment to all internal stakeholders, raising employee awareness and providing training to all departments and every hierarchical level within the business. This way, everyone in your company knows their role in identifying warning signs and exposing potential Accounts Payable fraud risks.
3 Types of Advanced Technologies That Are a Must for Preventing Fraud
Do you know which advanced technologies you should be leveraging while creating strategies to protect your Accounts Payable (AP) department from fraudulent activities? If not, you’re leaving the door open for hackers to come in and take control of your business (and possibly even the lives of your employees). The good news is that all it takes is a plan in place, one that will counter fraud attacks in order to easily increase the security of employees, vendors, suppliers, and your business.
Since technology is constantly evolving we recommend that you start by familiarizing yourself with the newer, more advanced options that currently exist. This understanding will enable you to better understand how to fill in any existing gaps, consider how your company can use them to address pain points which facilitate harmful fraudulent activities, and if needed make a case for change.
For example, when you’re looking for advanced technologies that fill in the gaps, you want to ensure it provides total traceability of all actions taken regarding documents and each invoice (the audit trail). In addition to accomplishing this, the most advanced tools also integrate algorithms capable of extracting all the data present in those documents or invoices. The software will then run a comparison - a two-or three-way check - to help detect and prevent errors or document fraud, preventing things such as making a payment on a fake vendor invoice or triggering alerts if abnormal data is detected.
These are just the top features essential to preventing financial fraud and cybercriminals from sneaking its way into your company's AP department to steal the information from any number of invoices or documents. Luckily for your business, employees, and vendors, you can protect your documents and invoice data by ensuring your invoice processing and payment automation solution offers big data, machine learning, and digitization technologies. What exactly are their roles?
Digitization is the process of converting any type of document and date into a digital format for further processing. Digitization is how a company can go paperless so they no longer need to worry about losing documents with sensitive information that can land in the wrong hands.
Big data handles large amounts of data from invoices and documents, no matter the digital format, to create a structured overview of what’s been collected. It does this at high speed and typically in real-time. With big data, you’ll improve visibility throughout the invoice processing and payment workflow to keep up with where an invoice or document from the moment it’s in the system to payment.
Machine learning uses all the data fed to the system through the digitization process and sorted by big data, automatically learning and improving a business’ processes with little to no human intervention. Without this intervention, there will be a natural decrease in errors (a machine doesn't need rest or nourishment!), and the technology can learn to detect if a transaction is fraudulent accurately.
We, at Yooz, understand how powerful these technologies are and how they individually contribute to your invoice processing and payment workflow. We believe that combining these advanced technologies is like having an armor of steel that simultaneously protects your Accounts Payable functions and business.
However, regardless of whether you see advanced technologies as a brain full of knowledge and security or as an armor of steel, the bottom line is that they play and essential role in your fight, decreasing any accounts payable fraud risks.