Your accounts payable department has a hefty lineup of duties, and one of the most important is keeping out an eye for fraud. Payables fraud can come in various forms, hit companies of any size and stem from both internal and external sources. Closely monitoring several areas can help catch and prevent the most common fraud types. 

Payment Fraud 

Vendors may consistently round invoice amounts up to whole numbers, skimming dollars or cents that can add up substantially over time. Also be wary of invoice anomalies, such as a sudden increase or decrease in invoice frequency or amounts, or invoices submitted at strange hours. Accounts payable technology can help catch atypical activity, with metrics established to alert team members when anything appears suspicious. 

Duplicate Payments

Duplicate payments can certainly happen by accident, caused by typos, entering a vendor’s name differently or citing an incorrect invoice number. Prevention here can start by ensuring validation procedures are embedded in your procure-to-pay system and workflow. Setting up your system to prevent keying in duplicate invoice numbers is a good start, as is cleaning up your master files. 

Customer Master Files

Meticulously maintained master files make it tougher for fraud to occur, well worth the tedium and time it takes to keep them current and accurate. Start by verifying every tidbit of vendor info on file, including addresses, contact names and bank accounts. Establish a verification process whenever a change is made on any file to prevent fraudulent behaviors, such as a disgruntled employee calling to change the vendor’s on-file bank account number to his own. 

To help reduce duplicate entries for the same business, have standards in place that outline how you abbreviate address information, alphabetize and enter contact names. If purchasing and payables can share vendor master files, the risk of fraud is further reduced by having only one source for critical data. 

Check Fraud 

Diligence is must for catching check fraud, being on the alert for missing checks, numerous returned checks and other irregular activities. Some automated procurement systems can be programmed to flag abnormal check-related activity. Reconciling accounts payable check logs with your monthly bank statements can also help spot discrepancies. Here you can merge and compare data from the check register, bank statements and AP logs to make sure all three match across the board. 

Check Request Fraud 

This type of fraud can occur in various forms when employees request reimbursement for expenses. One trick is for employees to expense a hotel room, meal, airfare or other amenity and then actually purchase the item for less, pocketing the difference. Strong procedures that confirm costs and accurately account for expenses can reduce this risk significantly. 

Solid accounts payables processes that include multiple approvals, fine-tuned analysis and thorough reporting can help keep payables fraud at bay, and numerous technologies are at the ready to help make the task easier. 

Reduce payables reporting fraud with Chrome River’s AP automation software.

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Our choice of Chrome River EXPENSE was made in part due to the very user-friendly interface, easy configurability, and the clear commitment to impactful customer service – all aspects in which Chrome River was the clear winner. While Chrome River is not as large as some of the other vendors we considered, we found that to be a benefit and our due diligence showed that it could support us as well as any large players in the space, along with a personalized level of customer care. Sally Abella, Director of Corporate Travel Harman International
We are excited to be able to enforce much more stringent compliance to our expense guidelines and significantly enhance our expense reporting and analytics. By automating these processes, we will be able to free up AP time formerly spent on manual administrative tasks, and enhance the role by being much more strategic. Ben Zastrow Zelle
10 Ways to Prevent Business Expense Fraud

10 Ways to Prevent Business Expense Fraud

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