Accounts Payable (AP) Fraud can be a major headache for organisations, with potential consequences that range from financial instability to reputational damage. A recent report from PwC’s Global Economic Crime and Fraud Survey 2022, revealed that companies are losing an average of 5% of their annual revenue to fraud, with cybercrime and asset misappropriation being the two most common forms of fraud. However, the good news is that prevention is possible.
With the right tools and strategies, organisations can create a robust system for preventing AP fraud. By taking proactive measures and leveraging modern technology, like ApprovalMax, companies can create effective strategies and systems that keep them protected long-term. To help you get started, we’ve put together these 10 expert tips.
10 Tips for Preventing Internal Fraud
1. Automated systems:
Streamline your financial processes with automated systems like ApprovalMax, to reduce the risk of internal fraud by providing real-time monitoring and detection of any suspicious activity as it happens.
2. Segregated responsibilities:
Divide responsibilities among employees to ensure that no single person has complete control over your organisation’s finances.
3. Regular audits and risk assessments:
Conduct regular internal audits and risk assessments to stay one step ahead of fraud. This is also a crucial step in identifying vulnerabilities and detecting fraud before it becomes a serious problem.
4. Restricted access to sensitive data:
Keep your financial information secure by restricting access to only authorised employees. This protects your company’s data from falling into the wrong hands.
5. Stay informed of fraud trends:
Stay up-to-date on the latest fraud trends and tactics. This helps organisations adapt their fraud prevention strategies to keep up with evolving risks.
6. Regularly review and update internal controls:
Internal controls are not a set-and-forget measure. Make sure to implement regular internal control reviews to ensure your policies and systems reflect changes in the organisation and keep your fraud prevention efforts effective.
7. Regular fraud awareness training:
Provide regular fraud awareness training for all employees. This educates them about the risks of fraud, how to identify it, and how to report it.
8. Cultivating a culture of integrity:
Build a culture of ethics and transparency among employees to reduce the risk of internal fraud. Help your employees understand and identify fraud, and feel confident in reporting it.
9. Fraud reporting mechanism:
Create a reporting mechanism that empowers employees to report suspicious activity anonymously. This will help your employees to feel confident that they can detect and address fraud quickly, keeping your organisation protected.
10. Incident response plan and cybersecurity measures:
Have an incident response plan and robust cybersecurity measures in place to minimise the impact of any fraud that might occur, while preventing future fraud.
Protecting your business with ApprovalMax
As a business and finance leader, it’s important to stay ahead of the curve when it comes to preventing internal fraud. And, with technology constantly evolving and improving, it’s easier than ever to make lasting improvements to your company’s financial well-being.
At ApprovalMax, we understand the ever-evolving landscape of fraud prevention and have equipped our platform with the necessary tools to secure your financial well-being.
Here’s how we can help you take your financial management to the next level:
- Automated approval workflows: Delegating financial authority (DFA) is a key aspect of fraud prevention. With ApprovalMax, setting up and enforcing your DFA policy is simple and straightforward, and with approval speeds up to 50% faster than manual methods, you’ll have more time to focus on the work you value most.
- Audit trails and reports: ApprovalMax automatically generates detailed audit reports and trails. These critical tools make fraud attempts less likely, and provide valuable evidence if something does happen.
- Restricted access to Xero: ApprovalMax approvers can only access the information they need to approve documents, preventing access to the general ledger. This means that sensitive information is kept safe and secure.
- Detection of changes after approval: ApprovalMax’s fraud detection capabilities keeps you informed of any approved documents or changes made in Xero, giving you peace of mind in your financial management systems.
- Matching bills and purchase orders: With Bill-to-PO matching, ApprovalMax automatically detects and blocks approvals in case of any discrepancies. This means that you only pay for what was ordered, in the correct amount.
- Supplier approvals: With ApprovalMax, you can have confidence in your supplier purchases. The built-in supplier approval workflow and ability to limit purchase order requesters guarantees that only authorised suppliers are used, reducing the risk of fraud.
Protecting your business from AP Fraud
As the world becomes more digitally advanced, it’s important to take steps to protect your business from the risk of Accounts Payable fraud. PWC’s recent report highlights this growing concern, but the good news is that there are ways to prevent it from happening. By following our 10 tips for preventing internal fraud and using ApprovalMax as a tool to establish financial controls, you can create a comprehensive process for financial management and help ensure the financial security of your business.