The social and economic impact of Covid-19 has led to a marked increase in opportunistic crimes of desperation, particularly in digital payments fraud as consumers flock to digital channels to replace or supplement in-person interactions. This rapid shift to digital, which is providing necessary solutions during a time of crisis, is fuelling a surge in payments fraud worldwide. And the threat to companies isn’t only coming from the outside; internal fraud in departments responsible for supplier payments is on the rise, especially with staff working remotely.
Ryan Mer, CEO at eftsure Africa, a Know Your Payee (KYP) platform provider, says that while the amount of business transactions taking place online is constantly growing and remote working has become standard, business controls have not kept pace with digital transformation.
“Companies need to beef up their cybersecurity and anti-fraud solutions,” he says. “While implementing internal controls takes time, it is imperative that strict controls are in place to mitigate opportunistic as well as organised fraudulent activities.”
From advanced digital security to straightforward invoice numbers, here are five ways to make your Accounts Payable department the best it can be.
Always use invoice numbers
Often, simple tools are very effective, and invoice numbers are no exception. In fact, invoice numbers should be essential for both your Accounts Payable team and your suppliers. This not only helps everyone involved to quickly identify which invoices have been paid and which remain outstanding, but it also helps avoid duplicate payments. Ideally, your Accounts Payable team should use the invoice number as reference when making a payment, otherwise suppliers will find it almost impossible to track their incoming payments – and query it with your team or issue duplicate invoices.
Make sure your team follows a system to standardise invoice numbers from different suppliers, such as encoding leading zeros, using uppercase or lowercase letters, and adding or removing spaces.
Even your most trusted team members will likely make a mistake at some point, as they’re only human. Automate as many manual procedures as you can to minimise human error in your systems. A good web interface also saves time. A KPMG study, commissioned in Australia, showed that eftsure’s web interface, can save a business 29 minutes every time they add or change a supplier and 59 seconds each time they check a single payment. Such savings become very significant over time.
Don’t compromise on security
Financial institutions don’t match business names with account numbers, and fraudsters exploit this at every opportunity. It’s essential that your Accounts Payable team has measures in place to verify account names with numbers. Furthermore, ensure that your Accounts Payable web interface has security measures to mitigate fraud and other digital threats. And never compromise on security when it comes to your enterprise resource planning (ERP) system. One popular ERP system had to issue a warning earlier this year after there had been 300 successful exploit attempts on its systems in the preceding six months. Make sure your ERP system is not leaving you exposed to a dangerous security breach.
Keep receiving on track
Have electronic record-keeping systems in place so that your Receiving Department can keep track of any physical goods that have been purchased by the organisation – whether large amounts of stock or a small pack of pens for the office. Then, streamline all communications between Accounts Payable and your Receiving Department – and monitor that this communication remains continuous. If receiving records are logged in your ERP system, it’s a simple case of checking which items were requisitioned according to the purchase order, facilitating three-way matching so that the Accounts Payable team knows that an invoice is legitimate and accurate.
Ensure strategic alignment between Accounts Payable (AP) and Procurement departments with approval processes in place.
Any new supplier onboarding, whether recurring or once-off, should require an approval process when being onboarded. Although Procurement is often responsible for the onboarding of new suppliers, there needs to be an oversight between Procurement and AP. It is important for the AP department to be involved in the approval process of new suppliers and to have real-time access to supplier data. By doing this, processes are tightened and the loading of fictitious suppliers can be prevented.
One of the most important and effective internal controls in Accounts Payable is to ensure that different people are responsible for completing different components of a task. No single individual should have the responsibility of completing an entire task. Not segregating duties could compound losses caused by errors, as busy staff members can easily make data entry errors. Segregation of duties will allow your team to identify most errors before a payment is made. Even more concerning than human error, is the risk of internal fraud. Ask any auditor and they’ll tell you that segregating duties is the most effective way to manage the risks associated with both human error and internal fraud.
“Following these easy steps in your Accounts Payable department, will allow for efficiency, streamlined processes and prevent fraud from impacting your bottom line,” says Mer.