The modern era of technological advancements has enabled businesses across the world to manage financial transactions digitally. A rise in B2B digital payments and invoicing methods ensures efficiency gains, flexibility, and accelerates new business opportunities. But, the alarming increase in fraudulent and criminal activities makes it imperative for enterprises to think twice while approving a digital transaction.
According to the Association of Fundraising Professionals (AFP) reports, more than 82% of enterprise-level companies and 60% of the middle-market companies have experienced some kind of payments fraud in 2018, continuing a rising trend since 2013. However, accounts payable (AP) software with advanced functionalities can help you combat the risk of exposure to fraud.
Here we’ve detailed a few ways businesses can prevent payment fraud.
Centralize Accounts Payable Activity
Business payments include invoices from multiple vendors, which mean numerous paths for frauds to travel through. In a decentralized AP process, it’s challenging to track all invoices paid by multiple employees or from various locations. The AP software centralizes the accounts payable process, thereby giving the accounts department complete visibility into every step of the AP process. While ensuring your team knows every detail of the payment. Allowing them to reject payments instantly and securely while also enabling them to track the status of payments in real-time.
Employ Segregation of Duties
As most of the payments fraud cases are internal, managers can quickly view and identify where these fraud payments are. AP systems enable you to isolate the duties of managers, authorizers, and approvers, thereby allowing you to verify and minimize any frauds internally. Separation of duties and multi-level approvals help you mitigate the risks of receivables overlapping or payments of unauthorized invoices being paid. Allowing you to eliminate these kinds of fraud easily with a few simple checks-and-balances within the software.
It is imperative for businesses to track the accounts payable team often to ensure everything is on track. But, manually monitoring each employee working at various branches of the company involves tedious tasks and is very time-consuming. An AP system centralizes the accounts payable data and increases transparency, allowing you to track your employees’ activities in real-time.
Access Control
AP software enables you to not just allow members to access the necessary data, but also restricting them to access only certain functions. With the software, you can ensure certain employees with certain privileges are allowed to do various tasks such as invoice verification, approval, edit payee records, and more. And prevents anyone who is not authorized from performing these tasks. The access control feature allows you to limit the approvers from modifying the invoice data or vendors records, paying those invoices, and much more.
Dual Factor Authentication
Securing vendors’ information and storing other sensitive business data is paramount for any organization. According to the Secure Swiss Data survey, two-thirds of users make use of the same password everywhere, and 90% of these passwords can be cracked within 6 hours. Therefore, a password alone is not enough to secure your businesses sensitive data. An AP automation solution facilitates dual-factor authentication which mandates a unique security code (delivered via email or text message) to login-in, approve transactions, and release funds.
Streamline the Audit Process
Most industry experts recommend audits as an effective way to trap and prevent any potential fraud. Advanced AP software automates the auditing process and provides auditors with accurate real-time data, allowing them to inspection all invoices in order to detect and eliminate fraud. It eases the workload of auditors while eliminating the hassles involved in the paper-based payments process.
The Bottom Line
Although accounts payable fraud can be unavoidable, AP software provides businesses with a sense of security that can help them minimize many types of fraud. The software enables your accountants to double-check each invoice before releasing the payments. As the online AP system centralizes all the crucial documents in a secured cloud-based platform, you can access and track the actions performed to the documents leaving a clear audit trail to detect any fraud. Access control allows you to restrict certain employees from various functions of invoice processing. Any company looking to automate their AP processes should search and purchase software with the advanced functionalities which help to identify and prevent fraud, thereby allow you to conduct business securely and achieve your business objectives.
Author Bio: Marissa Levin is a marketing consultant, freelance writer at SutiAP, who regularly writes articles on Business, Finance, ERP, and Cloud/SaaS trends.