AP Automation Lets Teams Strategize Against Fraud | #phishing | #scams

While many businesses made the shift to digital during the pandemic, some — too many, in fact — are still relying on paper-based accounts payable (AP) processes.

It’s been well documented, of course, that AP modernization can improve cash flow collection. Indeed, PYMNTS’ own data show that 59% of chief financial officers at firms with annual revenues between $1 billion and $1.5 billion felt that digitization was key to improving their balance sheets.

Beanworks CEO Catherine Dahl told PYMNTS’ Karen Webster that AP automation can also be a potent weapon in the fight against payments fraud.

“The role of the accounting team is to think ahead and identify where there could be fraud — and then gate it,” Dahl said, adding that “you need to gate every possible place where cash is flowing out of the business.”

Messaging platforms, cellphones and emails are now the vessels cybercriminals use to infiltrate systems, and companies need to turn a microscopic focus on how they create purchase orders and collect and verify invoices — and on just who has authorization to make the payments themselves.

The Work-From-Home Shift

First thing’s first: The work-from-home environment has created new vectors of attack. Cybercriminals are using email attacks to exploit weak links in an organization, impersonating legitimate executives and business partners, and they target AP processes 61% of the time.

Executives, not surprisingly, have said that automation can make firms less susceptible to ransomware and other attacks. Dahl said that having visibility and controls in place to govern AP transactions can make the fight against fraud that much easier. She noted that digitization gives firms the opportunity to leverage the advantages of changing how they store valuable data, which in turn makes sure that processes and authorizations are digitized.

Digitization, she told Webster, “gives you plenty of opportunities to make sure that that things are accurate” — and you can add in layers of compliance that would not have been possible with paper, or even necessary when everyone was sitting together in the same office.

Dahl noted that with paper-based processes, there are ways to stick fraudulent invoices or claims into the process that otherwise would go undetected, as communication remains disjointed. Dahl pointed to the hundreds of legacy, vertical-specific enterprise resource planning solutions that aren’t efficient or particularly useful in the digital age — certainly not when regulators around the world are moving toward eInvoicing mandates.

Picture, then, the moving company that is inundated with false claims about reimbursing customers for broken items, or the “friend” who sticks a purchase order into a construction firm’s invoice flow that just gets added as a legitimate vendor claim within the blizzard of paperwork.

See also: How AP Automation Helps Fight Fraud

The Fraud Threat From Within

Fraud can also be conducted from within a company, Dahl said.

“When it comes to internal fraud,” she said, “it’s likely to be centered around employee reimbursement and expenses” and corporate cards.

Here, again, digitization can be a critical line of defense. The systems can be set up in such a way that re-submitted receipts can instantly be identified and flagged to prevent them from being paid again. That’s a far sight better than the Excel sheets that many companies, particularly smaller ones, still rely on for expensing.

The best practices start from the ground up, no matter the vertical and no matter the size of the company. Delineating strict lines of payments authorization and making sure someone in finance is there to determine there is no collusion can stop AP fraud tied to fictitious invoices or vendors in its tracks, especially with real-time data in hand.

That data can prove especially important as real-time payments become ubiquitous, said Dahl. Used wisely, she told Webster, real-time payments can be an aid toward cementing vendor relationships and making sure that payment terms between buyers and suppliers are satisfied.

The lack of controls, Dahl said, ultimately renders a company vulnerable — but automating the paper chase gives the accounting department the opportunity to rethink processes and be better assured that they are not paying on fraudulent invoices (or paying the same invoice several times).

Dahl said that software and platforms such as Beanworks’ make it easy to adjust controls within seconds and zero in on the places where vulnerabilities may lie.

“If you catch these things early on,” Dahl said, “you’ll be OK.”

Read more: AI-Powered Payments Platforms Put Paper Processes on Watch



About: Forty-two percent of U.S. consumers are more likely to open accounts with FIs that make it easy to auto-share their banking details during sign-up. The PYMNTS study Account Opening And Loan Servicing In The Digital Environment, surveyed 2,300 consumers to examine how FIs can leverage open banking to engage customers and create a better account opening experience.

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