Accounts payable fraud detection and prevention

Digital transformation of the contemporary business landscape has leveraged accounts payable (AP) systems that are accurate, reliable, and faster while facilitating cloud-based operations and remote workflows. But this increased flexibility and convenience comes at the cost of complexity, which, without proactive preventative actions, leaves the AP systems vulnerable to cybercrime. And with the AP scams becoming increasingly sophisticated, AP fraud has become a common occurrence for businesses today. The 2021 AFP® Payments Fraud and Control Survey Report has highlighted that close to 71% of businesses were targets of AP fraud in 2021. This is a staggering statistic as such scams have the potential to cause significant damage to your business. However, with the latest technological tools and resources, such crimes can be prevented if there are proper checks and balances. But what are some common threats you need to look out for in AP fraud detection and how can such frauds be prevented?

Threats to AP system

Anyone from employees, vendors, suppliers, or scammers can be the perpetrators of AP scams and can exploit vulnerabilities in the system for nefarious purposes. Some of the usual methods you need to be wary of in fraud detection and prevention include:

  • Emails: Scammers can potentially use compromised business emails or social engineering tactics to change important details in the invoice (change banking information or submit fake invoices) and trick the AP department into making direct payments to them. Such fraudulent activities are easy to overlook for AP personnel if they’re not searching for discrepancies in the email.
  • Linkage points: Nodes in your digital network, connecting ERP systems, purchasing systems, and AP systems are vulnerable to cyberattacks. Weak security protocols in these systems are susceptible to data theft and fraud.
  • Suppliers or vendors: Even with a robust AP security system, scammers can use third-party vendors’ systems and access your AP system through trusted channels.
  • Cloud services and remote work: Improper configuration of cloud controls, unsecured connection to cloud, or lacking safety controls on remote employees' devices can leave you vulnerable to AP scams.

Five ways to prevent AP fraud

Strengthening these channels and implementing stringent security protocols around these threats is the first step toward AP fraud detection and prevention.

  • Analyse your approval strategy and payment process: Get a better understanding of your approval strategy and payment process to identify any vulnerabilities.
  • Have regular audits: Regular audit monitoring can help you identify any suspicious transactions; you can these use audit trails to trace the potential source of fraud and investigate it.
  • Standardise vendor setup process: Standardise and control the vendor setup process to streamline the invoice processing and payment and information change requests to minimise the risk of fraud.
  • Implement fraud awareness training: AP personnel falling victim to phishing attacks or social engineering tactics is one of the most significant fraud risks. So, implementing fraud awareness training can contribute greatly to fraud prevention.
  • Automate payment process: Manual approval and payment processes can leave a lot of gaps that are vulnerable to AP fraud. Automated payment processes can eliminate human error, minimise chances of tampering, and flag any suspicious activity in real time. This can allow you to investigate and prevent any scam attempts.

For organisations on the digital transformation journey, agility is key in responding to a rapidly changing technology and business landscape. Now more than ever, it is crucial to deliver and exceed organisational expectations with a robust digital mindset backed by innovation. Enabling businesses to sense, learn, respond, and evolve like a living organism, will be imperative for business excellence going forward. A comprehensive, yet modular suite of services is doing exactly that. Equipping organisations with intuitive decision-making automatically at scale, actionable insights based on real-time solutions, anytime/anywhere experience, and in-depth data visibility across functions leading to hyper-productivity, Live Enterprise is building connected organisations that are innovating collaboratively for the future.

How can Infosys BPM help?

Infosys BPM Accounts Payable on Cloud (APOC) platform helps you turn your invoice processing into a profit centre by reducing accounting costs and freeing up resources to drive efficiency and growth.

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