Reduce the risk of accounts payable fraud

Digital transformation is revolutionising organisations from top to bottom, with businesses of all sizes investing in emerging technologies — including artificial intelligence (AI), machine learning (ML) and automation — to streamline operations. Technology investments have been critical to help businesses keep pace with the modern world of work, especially as companies increasingly engage in new ways of working, such as hybrid work environments. However, as businesses integrate more flexible, technology-driven tools and processes, they also expose their operations to additional risks.

New data from the Australian Competition and Consumer Commission (ACCC) revealed that Australian businesses reported AU$23.2 million in scam losses across 2022, representing an increase of 73%  from the previous year. The rise in reported losses underscores the critical need for businesses of all sizes to implement robust fraud prevention measures to protect themselves and their finances. Currently, one of the biggest vulnerabilities businesses face is the operational gaps created by the adoption of new technologies and hybrid work environments. These gaps can be exploited, posing a significant risk not only from external threat actors but also from internal sources.

Accounts payable fraud the biggest risk

For finance teams, the biggest risk is accounts payable fraud. In fact, research shows that 44% of global finance teams know of someone who has been a victim of accounts payable fraud within the last three years, and 54% have experienced internal fraud. In Australia, false billing scams saw a significant uptick over 2022, increasing by 1174%, contributing to AU$8.6 million in losses and causing a median loss of AU$50,000. In this type of scam, the fraudster sends fake invoices or bills to individuals or businesses for goods or services that were never provided. According to the ACCC, in 2022 a group of farmers from Western Australian fell victim to this type of scam, losing AU$1 million. The fraudulent activity was only discovered when the farmers reached out to their clients after noticing missing payments.

To mitigate the risk of accounts payable fraud, businesses must continue to invest in technology to help bridge the gaps in both their finance processes and cybersecurity.

Fraud is a major challenge for businesses of all sizes, and disparate work environments can create more gaps in visibility, especially for accounts teams that rely on manual, paper-based processes. This can exacerbate the challenge that teams already face, especially if they are also under-resourced.

Without the proper processes and tools in place, accounts teams may struggle with incomplete documentation and have difficulty tracking spend trends and behaviour. This can create opportunities for internal and external malicious activity and exploitation. Additionally, investing more time in completing manual audits and reviews can take time away from more strategic work, which amplifies the impact on the business. To bridge the gap and reduce the potential for fraud, businesses should invest in new technology to help streamline the finance team’s tasks and empower them to contribute to other high-value business activities.

Technology streamlines finance processes

The latest travel and expense management solutions use automation to simplify expense processes. By using modern technology, accounts teams can create digital paper trails for expenses, which can reduce errors and duplication, improve compliance with organisational and industry regulations, and provide data for better decision-making. Digital solutions let users capture spend in real time, minimising the potential for missed claims while also providing finance teams with more accurate insights into spend. Automated solutions can also cross-check claims and invoices, flagging duplicate entries early in the process before they reach finance. Ultimately, expense management solutions can go a long way towards helping businesses of all sizes detect and prevent fraud.

One of the biggest weaknesses and risks for fraud in businesses is the combination of gaps in expense and invoice processes along with inadequate detection capabilities. Businesses that rely on paper-based processes and manual audit and review processes increase the risk of errors, duplication and, ultimately, fraud. By investing in technologies that use automation, businesses can significantly reduce their risk and eliminate the potential for errors.

Technology can be a blessing and a curse for businesses; new technology opens the door for improved processes, but it also opens the window to potential threats and exploitation. However, businesses that invest in digital expense management solutions can strengthen their cybersecurity by eliminating the potential for fraud through increased use of technologies like automation. This also frees up finance teams to focus on higher-value work.

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