Fraud. It’s an issue that most CFOs worry about and that they hope never touches their companies. Unfortunately, fraud remains a reality for all too many organizations. Recently, the U.S. government was a victim of invoice fraud. It was reported that a government defense contractor submitted inflated bills and phony charges for personal expenses such as home decorating, vacations, etc.
While this story is just one example of fraud, the fact is that it takes place every day. But the good news is that governments and other organizations can deter invoice fraud. It all begins with an automated invoicing process, which enables you not only to effectively monitor spend and benefit from efficient processes, but also to detect anomalies to help prevent fraud in the first place.
Here are a few tips for preventing fraudulent invoices:
- Put the right practices and processes in place. Automation enables you to easily set up checks and balances in your system, define specific access privileges, assign approval requirements based on established thresholds, require POs for certain purchases, and other safeguards. For example, you can ensure that employees can only view the information they need, and require that expenses over a certain monetary value get sign-off by a VP or unit head.
- Make sure you have the visibility you need. Ensure that your system provides real-time visibility across all your invoices, so at any given moment you can see all your outstanding liabilities and spend. The most effective way to gain deep insight is to capture financial information across purchase-to-pay (P2P). Combining transactional data across invoicing, procurement, accounts payable and your trade networks provides the most complete picture of the movement of cash inside and outside your business.
- Use analytics to dig deep. By monitoring key performance indicators (KPIs) from your analytics dashboard, you can easily spot something that looks out of line. For example, you can gain instant, cross-enterprise visibility of spend according to location, category, supplier or organisation, and you can view it over time and by value. When choosing a solution, look for one with highly visual reporting to make information easily accessible to business leaders. Make sure it also has the ability to delve deep into the data to uncover root causes and view supporting documentation.
- Build an audit trail. Ensure that your automated system captures every action taken on an invoice, including the time when it occurred and who handled the invoice at each stage.
By implementing these best practices, you can help deter and limit the F word in your organisation as well as benefit from improved working capital management and optimised spend.