ITESOFT Insider View – Fraud in AP And Expenses.

ITESOFT & VAT IT Explore Fraud In AP And Expenses.

The final episode of this series, looking at fraud in AP and expenses with our newest partners from VAT IT.

From compliance, P-Cards, invoices & document manipulation. Fraud impacts more than 50% of businesses every year..

Part 5 of a new 5 part ITESOFT Insider View series.

Missed part 1? Catch up here. 

Missed part 2? Catch up here.

Missed part 3? Catch up here.

Missed part 4?? Catch up here.

Watch the video, listen to the podcast or read the transcript below.

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Fraud in AP and Expenses.

Nick Dunnett: Welcome back to the latest ITESOFT Insider View. Delighted you are here with us, and, once again, delighted to have Jamie here again from VAT IT.

We have been going through a whole series, a variety of different things and how your organisation and our organisation link together.

For this episode we are going to look at fraud in ap and expenses, and the impacts of fraud and how that is causing problems for people. And how we can help support organisations in their fight against fraud.

From a fraud perspective, a key fact for organisations from the last global research that was done into this.

About 50% of organisations admitted (and that is important) admitted that they had suffered from fraud in the previous year.

I think it is fair to say that the real number is probably higher than that.

But this is one of the challenges for people, it is a topic that people do not want to admit to.

Document Based Fraud.

What is also clear is that a lot of the fraud in ap and expenses that is happening is document based. Ultimately a document is something to back up what your story is.

One of the things, therefore, from an ITESOFT perspective, where we are delivering benefit to our customers, around digitalising documents is what can we do to help?

What can we offer for companies in this area?

If we look at a procure to pay process, one of the first things you can do is put purchase ordering in place.

That will drive an improvement and reduce likelihoods of fraud in AP. It does not remove it, but it reduces it.

Travel and Expenses Fraud.

You guys do a lot of work in the travel and expenses area, another area where in some ways the worst kind of fraud (because it is employee fraud) is happening.

So, there is obviously an area around things like P Cards that people can look at to try and address some of this.

What are some of the reasons that people may want to go down that road? Apart from fraud prevention?

Jamie Breslaw: I think, when you said that some of the worst fraud is employee fraud, the reason that P Cards exist and are functional and are something  that is considered as viable is because, ultimately, the benefits out way the risks of trusting your employees.

There are easy controls put in place around things like limits.

Absolutely, from our perspective, it can scare companies sometimes that there is a card connected to a commercial bank, and a member of your family has access to it, and then use the P Card for personal purchases.

I think it is an easy avenue for fraud, but there are very stringent ways that you can mitigate that risk as far as possible.

Supporting Documentation to Help.

You have also got that tag on, of what is behind that transaction.

Allowing companies the opportunities to claim the VAT back from those expenses.

Essentially you need some form of backing or supporting to reclaim that cost.

What we do with our clients that engage in P Cards now is essentially we work with them to understand their process.

We deliver a list of controls.

We cleanse their data.

And we ensure that the classification of their expense is correct from a VAT compliance perspective, as well as then flowing into the accounting system.

Adding Complexity.

It is a big thing on the travel expenses side, now you have P Cards that are essentially just a credit card for employees.

And now they are becoming virtual cards, so you do not even have a physical card!

This adds another layer of complexity.

We work with our clients to ensure that the VAT recovery comes off the back of controls and designated to make sure that the VAT recovery and, importantly and entry point, that expense type is compliant.

With as much of a reduced risk of fraud as is humanly possible with a controlled environment around that.

Nick: I think, from our side, the document itself, whether a receipt or a supplier invoice, or some other form of document, a supplier invoice to your Accounts Payable or a copy of an invoice that is being used for an insurance claim.

Easy Editing of Documents for AP and Expenses Fraud.

These days it is so easy to take a photograph of a document for AP or expenses, to open an application, and edit it, and commit fraud.

One of the things that we offer to our customers is an ability to start identifying when that type of alteration has happened.

We can then flag potentially fraudulent documents and report.

Jamie: Where there is a pre-defined supplier list?

Nick: Exactly, reporting on things that seem wrong: So, an alteration has happened that means that this purchase has happened at 3 am in the morning from a shop on the 29th of February, when there wasn’t one!

But also, it is looking at, have they changed the values?

It may be that this is an insurance claim, and it was something that initially cost £100 is being put in for £1000 because an extra 0 has been added.

How can you prevent that type of thing?

Expenses Fraud on P Cards.

When you are looking at spend, one of the things that can happen, from a fraudulent perspective.

With P cards, as well as with generic expenses.

You go to the shop and buy a perfectly valid product, and at the till you add a gift card for an extra £10.

Now, the receipt value is probably within the acceptable limits, the product you bought was ok.

But there is this extra thing there that was clearly fraudulent. That gift card is for you to use another day, and not for the company.

Looking at that from reading the document it becomes important to understand what is there.

And, as you said, there are other things to do once you have read it, for example is this supplier an active supplier?

Supplier Fraud in AP.

Are, on an AP, are the bank details that they have put on that the ones that you have already got in your ERP system?

We can offer a mutualised supplier data base, which is how we are able to achieve high success rates of OCR. The 85% rates that we can guarantee.

But it also means that we can see if you are suddenly being asked to use a different bank account from someone else that uses that supplier.

Now, it may be true, they may be changing bank details, or they may be using 3rd parties as an invoice factoring process.

But it flags something as a warning, and people are being asked to pay the wrong supplier.

Validating Documents.

So, we have that area of fraud, the other thing that we also have is validating any other document that come through.

For instance, we are doing a lot of work around Know Your Customer. So, are you who you say you are!

Whether that is an application for something, or perhaps validation for a loan.

We have customers that are have taken our solutions and used this type of process to confirm the documents that they are receiving.

Is this a real copy of your passport, is it a real passport? Etc.

To enable applicants to get through an online process much, much more quickly.

For instance, notifying them if the document they have submitted is unreadable, immediately, so that they can complete the process.

We all know that if you get halfway through a process thinking you have finished it, and the organisation comes back to you 3 days later asking for resubmissions, can you send it again?

It is too late, we have got bored, we have given up etc.

Maximising Completion Rates.

So, helping our customers to maximise completion rates of applications means they have a much higher rate of conversion and that is brilliant.

Jamie: You also discussed there, the copy of invoices.

And that links nicely to the maximisation of completion rates.

We like to maximise our clients VAT yield, and generally, if you have a copy of an invoice where you need the original to claim.

Well, we have a re issues team that will go with your permission and speak to suppliers to ensure that you have that VAT compliant invoice to maximise your VAT yield.

Compliance First Time Around.

Nick: Exactly, and I think the rules change from country to country about what is a legally compliant stored, electronic, version of a document.

But, again, ITESOFT are aware of that and can help our customers to ensure that they have that in the jurisdictions that they are operating in.

Which mean, when you are then coming in working on the reclaims, you may not have to go all that way back, because the version that you have in house is a certified original.

We can make that process simpler, which is important to customers because it allows them to get that VAT reclaim more quickly.

After all, it is a process, you are going to that government asking for cash back.

Jamie: Compliance first time around! Is easier.

Nick: Its quicker, you get that cash back as soon as you can, which is what we are both trying to achieve, isn’t it!

How do we give our customers maximum benefit to allow them to get things done faster? And that is important isn’t it?

Jamie: Absolutely!

Thank You.

Nick: Thank you Jamie, thank you for your time, I hope you have enjoyed this series that we have been able to put together with VAT IT for the ITESOFT Insider View.

Thank you for joining us as we took a look at fraud in AP and expenses, and we look forward to the next episode and hope you will be able to join us for that.

Jamie: I would just like to say, thank you very much for having me, we are very excited about this partnership and working together.

We feel that we can really add, and hopefully you have gauged from these sessions, mutual benefit to our mutual client base and to new clients.

Nick: Brilliant, thank you for joining us!

Want to know more about VAT IT? Get in touch with Jamie directly on LinkedIn!

Or check out the VAT IT Website.

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