Hi, my name is Bushra, and in this, my first article, I will be writing about some of the potential risks associated with accounts payable.
This will include a look at a couple of key areas where fraud can be a risk, payment processing issues, and how to resolve these problems.
My aim? Well hopefully this will give you an insight into how to avoid some of the associated risks when processing invoices, allowing you to gain more knowledge about the benefits of financial automation.
Two types of fraud associated with accounts payable…
When it comes to accounts payable and processing invoices, its important to be wary of the risks that come along with it.
One of the main issues here is fraud, both external and internal. According to the Association of Certified Fraud Examiners, fraud represents an average of 5% loss to most businesses which, globally, amounts to a staggering $3.7 trillion-dollar issue!
There are a range of ways in which external and internal fraud can affect accounts payable. For example, fraudulent transactions submitted amongst real ones could be processed by an AP team member as well as false supplier accounts being created by the fraudster.
This of course means the money is heading straight into the fraudster’s pocket, which happens way more frequently than you think.
As frightening as this may sound, there is always a way to prevent this from happening by using modern robotics and invoice automation, resulting in fraud prevention. This is especially true if the maintenance of your supplier data base is done with a dedicated system, rather than by hand.
Of course, having some simple checks in place for the creation and editing of supplier information will help, but only for as long as these rules are followed…
Using a dedicated system, not only helps prevent fraud, but it also allows employees to focus on the more vital parts of the business rather than constantly working on processing invoices (boring!) making work a lot more enjoyable.
To add to that, acts of fraud are less likely to occur if employees are happy, so what’s holding you back from automating your accounts payable process?
Payment processing issues
All kinds of things can go horribly wrong when processing payments, especially when the payment is late or has been missed.
In worst cases, a lot of companies find it difficult to keep organised, resulting in invoices being lost altogether.
One of the reasons? Well if invoices are sent out to the business for sign off, manually, this will add huge delays to the processing and payment of the invoice. Assuming the invoice is ever actually signed off and returned and doesn’t just get lost!
What a pain this is for the accounts payable staff, only making their job tougher than it already is.
Not only is manually processing boring and repetitive, AP staff may even miss important information and steps with processing an invoice, creating additional risks.
But how can this problem be dealt with? Digital automation can provide dashboards and analytics for management of a business, allowing them to keep organised, separating paid invoices from ones that still need processing.
Trying to solve the risks associated with accounts payable can be complicated when invoice processing is still done in a manual way, therefore turning to an invoice automation system will ensure that your business is protected from fraud, errant payments, late payments etc.
Another issue that needs to be addressed is the problem of duplicate payments, meaning a supplier is given an additional payment after already being paid.
This is often due to the lack of detection an accounts payable system has. If we consider that invoice that was sent for sign off to the business, but didn’t come back. Well, the supplier will just send another. What happens when they are both processed?
Not only does this lead to money loss for a business, it is also a waste of time for those processing the invoices.
Then of course comes the rush of trying to figure out where the over-payments went. Instead of dealing with all this stress and time-consuming work, wouldn’t it be a lot easier to resort to accounts payable automation?
Not only will this diminish the chances of duplicated payments, it will also stop payments from being missed.
Is manual processing resulting in money loss for your business?
Although there are the obvious risks that have been previously mentioned, it is also important to think about the loss of money that a business is encountering due to having manual processing.
Accounts payable can be a risk for the business because a large amount of money is being spent on providing staff members with their annual wage and making sure that staff are given the right resources on an everyday basis.
One Accounts Payable staff member can process up to 10,000 invoices per year using manual processing whereas an automated system can process more than 100,000 per year. In fact, the top number is basically unlimited as a system can run 24 / 7 / 365.
In relation to this, if a company has chosen to automate their invoice processing, many accounts payable staff can be given the opportunity to divert their attention to other parts of the business. Tasks such as supplier negotiation, engagement or on-boarding. In some instances focusing time on obtaining early payment discounts can be a real money maker.
Not only would this allow the business to significantly improve its supplier relationships it can also generate a real revenue stream, added bonus? Well, the business will also need a lower staff count to get work completed.
As well as allowing the company to flourish, there will also be safety against the risks associated with accounts payable, preventing any risks of fraud and missed payments.
What does accounts payable automation involve?
You may have a lot of questions on how accounts payable automation works and how it will specifically protect your business from risks.
By changing the way invoices are processed, success in a business is virtually guaranteed to take place.
ITESOFT provide streamline for invoices, using Artificial Intelligence and Robotics to replace simple, repetitive human tasks.
Artificial Intelligence involves machine learning through repetition, allowing it to notice any patterns or trends, often associated with fraudulent payments.
A further benefit of this is being able to go ahead with early payment discounts, due to having invoices processed faster than usual.
This will most likely be impossible if you are manually processing invoices, in this case it is easier to fall behind on having them processed, resulting in late payments.
Accounts Payable automation is designed to deliver the latest technology along with modern process management. ITESOFT provide one of the best capture services for organisations of all sizes, making sure they are protected from all risks associated with accounts payable.