Fraud is an unfortunate part of doing business. All types of companies, large and small, face the prospect of fraud. The cost of illegal behavior can be steep. It is crucial for organizations to find ways to detect illegal actions before they add up to severe expenses. Money leaks are another problem, and often the result of inefficient accounts payable (AP) processes. When invoices are paid twice, companies lose access to funds. Discover how AP automation helps businesses regain control and detect potential money leaks and fraud.
Dealing With Duplicate Payments
Duplicate payments are an ongoing, and entirely avoidable, problem for the AP team in any organization. Following best practices and ongoing education are crucial for employees to avoid duplication. It is far more prevalent than it should be, most commonly in companies with paper-based or partially manual systems. These losses add up quickly and mean the company does not have access to funds – even if they are repaid later. Detecting and reducing duplicate payments is achievable by instituting a completely automated AP system.
In many instances, a company can get its money back for paying duplicate invoices. While this is assumed, it is not guaranteed, and a vendor might never issue a refund. The occurrence of duplicate invoice payments indicates the department must improve its efficiency. For example, when a payment is late, another invoice is sent. As a result, both invoices might get paid rather than one. Companies with multiple locations may also wind up paying invoices twice. AP automation streamlines this process. Invoices are accessible to anyone within the organization. Updates are made in real-time so the latest data is always available. Even people in different locations can see AP updates as they happen.
Alleviate Late Payments
Late payments cost companies significantly each year. When a payment is rendered late, there is a risk that reminder invoices will be issued and duplicate payments made. Vendors often charge late fees when the invoice is overdue. And continued late payments might deter a vendor or supplier from working with a specific organization. This situation is problematic for industries that rely on a network of vendors and suppliers to create their products or support their services. Also, all of these unnecessary costs reduce profits for the company and can tarnish its reputation in the industry.
The goal of the AP department and C-suite is to process and pay invoices in less than 30 days. If this fails to happen, the organization must take immediate steps to improve operations. Manual processing is time-consuming and subject to human error. Often the invoice approval process is grueling and goes through several hands before payments can be sent. This takes time and could result in late payments. AP automation makes purchase orders and invoices available in real-time. Approvals can be done within the system, so they are accomplished in hours rather than days. Besides eliminating late payments, the company can take advantage of discounts for paying early or negotiate discounted payment terms, leveraging their positive supplier relationships.
Facing Fraudulent Payments
Fraud is inevitable, even if a company has long-time employees. In many situations, the fraud is accomplished by a trusted employee who intimately understands the company processes for payments. Detecting this fraud is imperative to save money and eliminate personnel who do not act in the best interests of the company. It can take significant time to detect fraud when companies use a paper-based AP process.
Fraud occurs in various ways, both internally and externally. Internal fraud can happen if fake suppliers are established and paid. External fraud may occur through phishing scammers who send out false invoices. And some perpetrators steal identities and credit card info. Fortunately, AP automation detects inconsistencies, verifies crucial information, and provides the company with the data to detect fraud quickly.
Money leaks and fraud can add up to millions of dollars for large organizations. Eliminate these problems by implementing AP automation solutions that detect them and help companies solve them right away.