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5 mins read

Accounts Payable Fraud

Invoice Finance Fraud: Seven Keys for CFOs

by Yooz on 07.20.2020

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Finance Directors are now obliged to manage a modernized team and make everyone aware of the wider implications. A fake invoice can concern either a client or a supplier. Here are 7 key elements all CFOs should adopt to avoid accounts payable fraud: client (fake invoice), supplier (fake bank information) and finance/cash-related (banking) fraud.

 

 

Make invoice risk management your priority

 

Companies worldwide suffer a cash loss of $7 billion due to fraud, which can be committed by company employees or individuals outside the company, such as partners, agents and clients. However, despite this alarming figure, a report by PwC confirms that only half of the business organisations surveyed say they carried out a global evaluation on the topic within the past two years. That figure shows how late companies really are, given the many costs to pay of becoming a victim. 

 

Automate your invoices processes

 

A fraudulent invoice can be integrated into company flow because of process vulnerabilities. In many cases, these vulnerabilities may be “easily” rectified before any invoice payment is made concerning a client, supplier or fake account by automating any time-consuming and repetitive service that can be a source for errors. A Chief Financial Officer who adopts automation also sees a fresh opportunity to keep their team from being limited to menial invoice tasks, while giving them credit for focusing on statistical analysis, risk prevention, tactical consulting and even customer support. 

 

Finance and IT need to communicate

 

30% of CFOs and Information System Directors (CIOs) agree on at least one point: CFOs have a false impression of CIOs. People often talk about a conflicting relationship between CFOs and CIOs, notably one’s lack of technical expertise vs. the other’s lack of business vision. With today’s digital transformation and increasing security vulnerabilities, sensitive data may be at risk, including client files and invoices, bank account details, patents, and more. CFOs and CIOs must therefore learn how to work together: while the CFO remains the protector of cash- and payment-related factors, the CIO enables the department to manage data and business applications.

 

Acquire the right skills in-house  

 

Data, which has become an undisputed source of value for company growth and intelligent decision-making, is now also the cornerstone for CFOs. However, risks related to data integrity and security are the price to pay, especially where the invoice process can be used as a vector for penetration. CFOs need to work with experts to master the associated data science and rise to the occasion in their effort to eliminate fraud, avoid loss and improve reporting. The PwC report confirms this trend, stating that CFOs in 2019 were convinced of the service that could be provided by hiring people with technical-operational profiles able to master software robots. This includes data scientists, business analysts, and more. Better late than never.

 

Engage stakeholders within the company

 

Regardless of their form, organisational transformation projects pay their own way when the company’s teams are actively committed and not limited by inefficient methods. This applies even more when handling issues related to abuse, especially false invoices. The human factor – client, supplier or employee – is often the primary source of invoice related problems. Training employees and raising awareness regarding the impact on business must therefore be among the CFO’s top priorities for the company. 

 

Implement a Cloud-based automation solution

 

For 83% of CFOs (compared to 31% in 2016), the Cloud has become inevitable for their company in every area including document digitalization, closing files, and invoice and cash management. Suppliers today can offer robust and secure environments that are ISO certified and accessible to all organizations. 

 

Effective invoice management is essential

 

There are some remarkably effective ways for finance departments to adapt their defences against the flow of invoice fraudsters and avoid undue payment. But how do you choose the right one? Invoice automation solutions factoring in the purchase-to-pay process have become essential for financial decision makers and are more functional than ever. Not just limited to providing total traceability of every action regarding invoice, cash or credit operations, the most advanced options also integrate algorithms capable of extracting all the data present in those documents in order to detect and prevent document fraud before payment or credit of any kind, triggering alerts quickly if a single sign of false data or information is detected. 

 

Prepare yourself,invoice finance fraud is not going away

 

Fraud will continue to pose significant challenges that will plague many CFOs as we move to an even more digital world. But while the progression of attacks may create greater invoice and payment issues for CFOs, they must also set up a specific service or solution to protect themselves. AI-based platforms can predict and analyse invoice irregularities, while Cloud-based systems are constantly advancing to offer the stronger security, bank protection and automated processes they need to minimize the risk of danger to the company.

 

The question for the finance team is not whether they will become a target, but when. The answer is that CFOs must start looking now to defend their business and reassure stakeholders.

 

Find out how you can protect your business from document and invoice fraud:

 

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