The Unspoken Problem
The English writer Charles Caleb Colton wrote, “There are some frauds so well conducted that it would be stupidity not to be deceived by them.” I, for one, am astounded by the cleverness of fraudsters and their ability to deceive even the most astute. Virtually every email requires some level of inspection before opening. Moreover, even the most sophisticated companies are susceptible to attack. Take the recent case of Google and Facebook and the Lithuanian man who pleaded guilty in March of this year to scamming them out of more than $100 million. The perpitrator sent fake phishing emails containing forged invoices and convinced the companies to wire funds to bank accounts he controlled.
Are we ignoring the problem?
But do we have the same level of vigilance when it comes to our business? Have we been lulled into believing that firewalls and software security programs interdict every attempt to steal data, money or intellectual property?
Financial fraud is ubiquitous
According to the Association of Certified Fraud Examiners, check tampering, billing schemes and fraudulent expense reimbursements account for the largest percentage of reported fraud cases. Financial statement fraud is by far the largest at over $800,000 per incident. It is also the most difficult to detect, taking over 24 months to detect. Because of the volume of invoices and frequent lack of approvals and oversight, accounts payable is a target area for financial fraud. PYMNTS.COM estimates that 3% of all invoices received are fraudulent. This is growing as perpetrators become increasingly more sophisticated in their use of technology.
AP automation can help
AP automation allows employees to focus their efforts on problem solving and more challenging assignments. Freed from rote data entry tasks, staff can focus on examining dubious and duplicate charges and automatically route them to staff trained in forensic accounting. Robust workflows can also help interdict fraudulent payments. On the horizon are new machine learning algorithms that promise to deliver even better protection as they begin to interrogate the payable processing stream. There is no reason to wait, however. AP automation would likely have detected the fraudulent phising attack on Google and Facebook, saving them millions of dollars and preserving their reputation, arguably worth several orders of magnitude more.