The Scourge of Businesses
Security, which involves preventing and fighting fraud - especially for documents - is a topic that continues to grow in today’s world of ongoing digital transformation. Warning lights are flashing red at many companies: according to The Association of Certified Fraud Examiners reports that U.S. Businesses lost in 2019 an average of 5% of their gross revenues to fraud.
Simply put, fraud is a criminal action intended to result in some kind of financial or personal gain. In the case of invoice fraud, this takes forms such as false invoices (charging a company for goods or services that never existed), inflated invoices (overcharging), or duplicate invoices. However, despite the implementation of increasingly sophisticated mechanisms to check, prevent, and/or protect, data shows that corporate fraud continues to grow. According to PwC's 2020 Global Economic Crime Survey, 56% of UK business surveys stated that they had been impacted by some type of economic crime within the previous two years.
Indeed, two indisputable exists: first, no company can escape the danger or fraud and second, there is no direct connection between company size and the monetary amounts of fraud. It is also worth noting that the human factor is both an Achilles heel for companies as well as a savior. Many, if not most, fraud attempts or schemes are defeated by human intervention.
Size plays a factor because not all companies are on equal footing when it comes to fighting against fraud. The human, organizational, and financial means implemented for protection will be different for a small, medium, or large enterprises. In addition, while going digital is a common way that businesses have fought back, this also opened a new way through which fraudsters can enter. Indeed, better technology has meant better informed and organized swindlers; the two are intrinsically linked with each other.
Despite the increasing amount of criminal activity, a growing awareness of the issue, and the considerable risks involved many organizations don’t have a contingency plan that they can activate if fraud occurs. Not for the most common financial impact, not for data theft, and not for the potential impact on the company’s reputation.
The CFO is responsible for the company’s financial health and therefore explicitly involved with any losses caused by fraud. But their job is no longer limited to simply crunching or reporting numbers. They now fill a need to safeguard and nurture a business through unprecedented perils of loss and the potential consequences for customers. They are, in fact, a general on the very front line of the struggle. With all the information on hand to review – from company organization to cash management - they are the ones best able to identify a widespread problem, mobilize all available resources, and administer any solution towards guarding the company’s financial information.
Indeed, the company’s finance director must adapt freshly learnt skills to spot innovative and more aggressive cheating, notably for invoice finance fraud. And these methods go far beyond traditional forms such as internal embezzlement and industrial espionage.
"Our technologies are used to detect falsification on various types of documents, such as pay slips, identity documents, proof of address, etc.
Pay slips are a very real example. By implementing steganographic analysis technologies, we can detect whether information such as numbers, dates, names, or salary amount were modified."
Jean-Marc Pédréno, Chief Technical Officer, Yooz.
Opportunities for crime arise from opportunity and, in the case of invoices, vulnerabilities in the invoice process. In many cases, these vulnerabilities can be rectified by automating time-consuming and repetitive manual tasks that are sources for errors. CFOs who have adopted automation also see an additional opportunity to enable their team to refocus their efforts on other areas such as statistical analysis, risk prevention, and strategic consulting.
One of the key pillars for invoice fraud detection is technology.
• Technologies are at the origin of modernization and digitization within companies.
• Technologies help finance departments systematize fraud detection.
• Technologies offer more “firepower” against fraud and enable adaptation that is not offered by more traditional methods.
Technology is the broad term, delving further there are advanced technologies such as Big Data, machine learning and digitization. Big data enables handling vast volumes of information, often in real-time. Machine learning is a component of artificial intelligence in its broader meaning, seeking to create and use algorithms to obtain predictive analysis based on data. Together, they make it possible for the company to go even further, such as risk scoring its clients and suppliers.
Digitization, or automation, technologies that leverage artificial intelligence (AI) are a key part of any effort to mitigate risks. It not only increases speed, but it reduces costs and improves agility. Creating and organizing a rigorous process that includes complete traceability and security makes these solutions extremely effective in fighting fraud.
Companies and their finance departments that leverage all these advanced tools can stay one step ahead of fraud and its increasingly challenging landscape.
Did you know?
Data, which has become an undisputed source of value for the company’s strategic growth decisions, is now also the cornerstone for finance departments. This only raises the impact of risks associated with data integrity and security. CFOs need to work with experts to master this data science and rise to the occasion in their effort to reduce fraud and improve reporting.
The 2019 PwC report confirms this trend, stating that CFOs in 2019 were convinced of the need to surround themselves with new talent, employees with technical-operational profiles able to master software robots. This includes data scientists, business analysts, and more.