How AP Automation Can Help Your Organization Fight Fraud

With thousands of financial transactions happening per year, a company’s accounting department can be vulnerable to fraud and other suspicious activity. Although many of us swear we would never fall victim to phishing scams, the truth is these scams are becoming more and more sophisticated every day.

An example of one such instance is the unfortunate case of MacEwan University in Edmonton. The accounting department recently became the victim of an elaborate — and very costly — phishing scam. During back and forth correspondence, the email sender requested MacEwan staff make a simple change to one of their vendors’ banking accounts. Once this change was made, the accounting department began depositing its payments into these fraudulent accounts. They were eventually traced back to Hong Kong and Montreal — ultimately costing the school nearly $12 million.

A situation like this can be avoided with AP automation. Ash Conversions International is a leader in automating accounting workflow to help organizations fight fraud. Our robust security practices are the best in the country, allowing our clients to have peace of mind when making monetary transactions. Before looking at how we can combat suspicious activity, let’s look at what AP automation looks like:

  • All hard copy invoices digitized immediately upon receipt
  • Use of modern technology to process all invoices in a timely manner
  • Automatic processing of recurring payments
  • No need for front-end personnel to manually enter numerical data

Restricted Access

If your business deals with a high volume of invoices, an automated AP system will have built-in security controls. When a department’s entire data becomes digitized, naturally everything becomes password protected. Correspondence is also encrypted, making it difficult for outsiders to gain access. In most automated AP solutions, user access is always authenticated. Employees are required to sign in, and access levels are determined based on job function. This means top-tier managers can obtain highly confidential financial data, but an accounting assistant may only be able to view vendor transaction history.

Channels of Approval

In AP automation, a clear framework is pre-established when it comes to invoicing approvals. Before each invoice is paid out, it must first pass through a series of channels designed to identify fraudulent activity along the way. No vendor will ever receive money without first going through this process. Double payments, which can cost a company millions, can also be avoided when all invoices are being checked multiple times for accuracy.

Sometimes, fraud can occur when scammers create fake businesses and begin sending invoices to large corporations. An electronic AP program can alert employees when a new vendor enters the system. If the attached address is a PO Box or residence, this is a red flag.

Meanwhile, an audit trail is created to establish transparency within the department. No payment, account change or pre-authorization request is made without formal documentation. An audit trail is also crucial during tax season to help identify suspicious activity.

Automated Email Notifications

When companies fall victim to phishing scams, as in the case of MacEwan University, it’s often because the involved parties are not being immediately notified of account changes. Had the vendor been aware that MacEwan staff were being asked to change banking information, a red flag would have been raised. The vendor would have alerted the school that they never requested such a change, thus identifying the email chain as a phishing scam.

When you employ an AP workflow automation solution, security notifications are regularly sent out to all parties. This keeps both your company and your vendors on the same page about payments and banking data. Employees can improve efficiency by concentrating on more important tasks, instead of spending time crafting emails about invoice processing. That is the beauty of workflow automation. Allow the technology to pick up on suspicious activity, so your workers can engage in client relations and customer service initiatives instead.

Utilize 3-Way Matching

Three-way matching is a very effective way to prevent invoice fraud. If your department can match every invoice to a purchase order and receipt of goods, then chances are you’re not paying a fraudster. That’s because most scammers will not take the time to create three separate documents. But although effective, implementing 3-way matching can be quite a challenge. It is a time-consuming task that often involves a lot of manpower. An automated workflow enforces 3-way matching effortlessly since all documents are categorized electronically.

Paper Becomes the Problem

In any organization, paper can lead to fraud. Hard copy invoices, pay stubs and employee documents are prone to theft. And if these confidential items are not disposed of properly, sensitive information is lurking in trash bins available to prying eyes. An automated accounting practice means hoards of documents are never stashed away in a storage room or back office. All information is on a secure IT system, protected with data encryption and password verification. It is nearly impossible to implement effective security controls on hard copies, apart from hiding the documents in a storage unit with lock and key.

Gain Control with AP Assistant

Ash Conversions International has created AP Assistant to replace a number of accounting processes in any organization. Our robust program virtually automates every task that would otherwise be performed manually. Digitization, data entry and exception processing are performed effortlessly within a secure framework.

Create a leaner workforce and optimize employee efficiency by implementing ACI’s AP automation solution. Contact us today for a no-obligation diagnostic to see how we’re transforming accounting practices across various industries. With ACI, your Accounts Payable processes will be more secure – and efficient – than ever before!

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