In my research for sharedserviceslink.com’s Accounts Payable Tech and e-Invoicing Summit 2012, I discovered that an issue playing on many minds in the accounts payable market at the moment is fraud.
The recent conviction of Jessica Harper for defrauding her former employer, Lloyds TSB, of £2.4m over two years, was unfortunately not as shocking and rare a story as it should have been.
Fraud continues to affect businesses in the UK on a massive scale. The 2012 Annual Report by the National Fraud Authority estimated that fraud causes losses of £73bn every year. A report by the cabinet office entitled ‘Eliminating Public Sector Fraud’ claimed that fraud costs the public sector alone £2.3bn.
How is fraud on this scale possible?
When companies are processing hundreds of thousands of transactions every year, it’s inevitable that some things slip through the net.
Fraud can originate from suppliers’ counterfeit invoices, falsely inflated prices, or internal unauthorised T&E spend. However, a significant number of erroneous payments originate from the organisations own procedures which can be more easily corrected. Paying the wrong supplier, failing to check whether the goods have actually been received and paying duplicate invoices are common examples.
Many of the accounts payable professionals I spoke to in my research knew that it was likely fraud was occurring in their organisation, but lacked the visibility to understand exactly where it was coming from and therefore were unable to prevent it in a targeted way.
What was also common was that many of these anxious organisations were processing their transactions manually. Inevitably this opens up the scope for human error and therefore the amount of times that fraud will go unnoticed.
So what can be done to tackle it?
The first point of call is to address the culture. Make your staff aware of the seriousness of the issue. Whenever something suspicious arises, check it, double check it and bring it to the attention of a colleague if something doesn’t match up. Rewarding caution over efficiency in this area may go a long way to preventing preventable mistakes.
Secondly, by investing in an automated system, businesses could prevent the majority of the above discrepancies whilst also benefiting from reduced costs and improved efficiency. e-Invoicing software, for example, incorporates a variety of controls into the process, such as 3 way matching. This involves matching the invoice against the purchase order and the shipping documents (including the goods receipt note).
What measures have you taken in your organisation to prevent fraud and what effects have they had?
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