There’s no stopping fraud in today’s world. Between the complexities of modern accounting, organizations caught between electronic payments and still having to rely on checks and the increasing use of AI by scammers, it can be overwhelming trying to reduce the threat of fraud.
This is why organizations turn to automation experts like SquareWorks, eftsure and Corpay to get a handle on the proactive work they can do to protect their financial teams from the fraud attacks that are now happening every day.
What, Where and When to Watch for Fraud
Accounts payable (AP) fraud happens when organizations fail to have the proper internal controls set up for their AP teams. Organizations without effective processes often experience significantly more human error which leads to mistakes in their financial data (which increases the chances of a fraudulent scam being successful) and results in a lack of proper oversight to prevent fraud from occurring.
Business Email Compromise (BEC) is a type of phishing and is one of the most pervasive types of fraud affecting AP teams. BEC is the easiest method for fraudsters to attempt fraud at scale—it has never been easier to send thousands of emails, to find email addresses of employees and use AI to seem legitimate. But how can you prevent fraud when everyone uses email?
- Falsifying invoices, duplicating payments and faking contracts are all common tactics used when fraudsters attempt BEC.
- One of the original indicators of fraudulent email in the past was bad grammar, poor writing and obvious changes in URLs or email domains; the use of AI to write professional-sounding emails and other forms of communication has had a transformative impact on email phishing, placing a huge burden on employees to decipher the legitimacy of emails.
- One of the easiest ways to fight against BEC is to simply automate your invoicing and payment functions, eliminating the need for back-and-forth emails between your employees and your vendors and entirely removing the chance of fraudulent email attempts.
Print checks are historically the most common form of committing fraud, due to how easy they can be to manipulate. Check forgeries, theft, tampering or unauthorized endorsements are all common ways to redirect check payments into the hands of fraudsters.
- Using a digital check printer can significantly reduce the risk of fraud.
- Despite checks being more vulnerable to fraud, it’s electronic payments that are growing in attacks.
- Even as more organizations move away from paper checks, including governments, the rise of electronic payment fraud will ensure robust anti-fraud protocols remain as important as ever.
Other types of AP fraud include:
- Falsified invoices
- Duplicate payments
- Fraudulent vendor accounts to redirect electronic payments
- Social engineering, which can include attacks via social media or text
Repercussions of Fraud
The financial losses as a result of fraud attacks are well-documented: billions across the world lost to fraudsters, with the number rising every year. New threats, including deepfake videos or voice impersonation, have already proven extremely effective.
Beyond the financial repercussions, there are more considerations to take into account when considering investments into fraud prevention for your AP team. Legal repercussions and reputational damage are also important factors. In addition, successful fraud attacks can result in the need for costly investigations and auditors that divert resources from other more strategic efforts, which are an added monetary burden on top of the initial cost of the fraud. Investigations and disruptions can also impact your organization’s cash flow.
No Silver Bullet to Fraud Prevention
It can be easy to buy in to a product or outsource to security experts, but fraud prevention starts at home, with your greatest asset: your employees.
Human error remains the greatest target for fraud, with sneaky tricks, psychological tactics and creating pressure on your employees. This is why one of the most important tools to prevent fraud is to have a robust system established for your AP professionals. The AP team at any company is often the first line of defense in preventing fraudulent payments from occurring and setting them up for success with an automated system designed to keep your AP functions secure is key.
This is why simple things like bank account verification, segregating duties between employees and establishing processes to avoid business email compromise entirely can be so effective. Casting a wide net by establishing every possible barrier to fraud is key to keeping your organization as safe as possible; there is no one silver bullet, but instead layered defenses to battle the many types of fraud being employed today.
Want to learn more directly from SquareWorks, eftsure and Corpay in our fraud webinar? Click here to see the webinar, now on-demand.
To find out about Corpay’s cross-border payments, click here
To request a demo from eftsure on payment protection, click here
