October 11, 2019
Fraud can have a detrimental impact on an organization’s finances, operations, and reputation—and it doesn’t discriminate against company size or type. According to the Association of Certified Fraud Examiners, in 2018, there were more than $7 billion in losses due to fraud worldwide.1 When fraud happens, it commonly occurs within Accounts Payable functions, as payments that are regularly sent out to vendors can be manipulated or tampered with. Payments fraud has been on the rise in recent years. According to research done by the Association of Financial Professionals (AFP), 82% of financial professionals in North America reported that their organizations experienced attempted or successful payments fraud in 2018; this is a 20% increase from 2014.2
1 2018, ACFE Report to the Nations: Global Study on Occupational Fraud and Abuse
2 2019, Results from the 2019 AFP Payments Fraud & Control Survey
There are several common types of AP fraud—both external and internal:
One reason AP fraud occurs so frequently can be attributed to the rise of international business and global supplier payments, especially within the last decade. Globalization affects even mid-market and smaller organizations as international markets are becoming more accessible to businesses of all sizes. Another common cause of fraud is a heavy reliance on manual AP methods, including check payments and paper approval routing. With manual processes, it is easier to tamper with records, forge check endorsements, and fabricate approvals. Also, despite the belief that paper trails are foolproof, especially when it comes to audits and investigations, fraud occurring amidst manual operations is not easily detected. Unfortunately, the use of manual payment methods is still a favored option for many organizations (see Figure 1).
Which of the following payment methods does your organization currently use?
Organizations need to improve visibility and tighten their grip on risk prevention across the entire AP process.
Organizations—particularly those in the mid-market with more vendors than a small and medium-sized enterprise (SME) but not as many controls in place as an enterprise—need to improve visibility and tighten their grip on risk prevention across the entire AP process. When AP is operating manually or an organization lacks fraud prevention measures, there are many process and control gaps in which fraud can take place. One of the top payments-related pain points is duplicate invoices and/or payments, followed by many others that pertain to fraud and risk management, including reliance on paper-based processes and invoice to payment matching (see Figure 2).
Still thinking about your organization’s current payment solution and/or process, which of the following describes your organization’s top payment issues or challenges?
When invoices and payments processing is paper-based, they are highly difficult to track and it is much more common that someone pays a fraudulent invoice, whether unknowingly or intentionally. Lack of visibility into payment activity can also lead to more frequent duplicate payments or higher chances of check or ACH fraud.
Once organizations adopt an AP automation solution, they greatly improve their risk management capabilities.
Once organizations adopt an AP automation solution, they greatly improve their risk management capabilities through improved visibility, tracking, and controlling invoice and payment processes. Increased visibility leads to benefits like fewer duplicate payments and lower risk of check/ACH fraud, as well as more efficiency for employees and lower costs to the business overall.
Organizations can take the following steps to improve their AP’s risk management and avoid fraud:
Adding transparency and tighter control throughout the financial process will strengthen organizations against risk and loss.
There are advanced solutions available for organizations that are looking to improve their management of risk and fraud prevention through the steps listed above. With globalization and technology transforming markets, supply chains, and business operations, AP departments should think proactively about risk and fraud management, as well as more strategically overall. Adding transparency and tighter control throughout the financial process will strengthen organizations against risk and loss, and prepare them for an increasingly diverse and digital business world.
Beanworks automates accounting workflow to empower teams to succeed. From purchase to payment, Beanworks integrates with organizations’ software to make AP simple and delightful. Thousands of users manage AP at a fraction of traditional processing costs while remaining focused on financial management and reporting. For more information on how to save time and focus on what matters most, please visit www.beanworks.com.
Levvel Research, formerly PayStream Advisors, is a research and advisory firm that operates within the IT consulting company, Levvel. Levvel Research is focused on many areas of innovative technology, including business process automation, DevOps, emerging payment technologies, full-stack software development, mobile application development, cloud infrastructure, and content publishing automation. Levvel Research’s team of experts provide targeted research content to address the changing technology and business process needs of competitive organizations across a range of verticals. In short, Levvel Research is dedicated to maximizing returns and minimizing risks associated with technology investment. Levvel Research’s reports, white papers, webinars, and tools are available free of charge at www.levvel.io.
All Research Reports produced by Levvel Research are a collection of Levvel Research’s professional opinions and are based on Levvel Research’s reasonable efforts to compile and analyze, in Levvel Research’s sole professional opinion, the best sources reasonably available to Levvel Research at any given time. Any opinions reflect Levvel Research’s judgment at the time and are subject to change. Anyone using this report assumes sole responsibility for the selection and / or use of any and all content, research, publications, materials, work product or other item contained herein. As such Levvel Research does not make any warranties, express or implied, with respect to the content of this Report, including, without limitation, those of merchantability or fitness for a particular purpose. Levvel Research shall not be liable under any circumstances or under any theory of law for any direct, indirect, special, consequential or incidental damages, including without limitation, damages for lost profits, business failure or loss, arising out of use of the content of the Report, whether or not Levvel Research has been advised of the possibility of such damages and shall not be liable for any damages incurred arising as a result of reliance upon the content or any claim attributable to errors, omissions or other inaccuracies in the content or interpretations thereof.
Research Content Specialist
Jamie Kim is a Research Content Specialist for Levvel Research based in New York City. She develops and writes research-based content, including data-driven reports, whitepapers, and case studies, as well as market insights within various digital transformation spaces. Jamie’s research focus is on business automation processes, including Procure-to-Pay, as well as DevOps, design practices, and cloud platforms. In addition to her research skills and content creation, Jamie has expertise in design and front-end development. She came to Levvel with a research and technical writing background at an IT consulting company focused on upcoming AI and machine learning technologies, as well as academic book editorial experience at Oxford University Press working on its music list.
This guide explores the potential ROI of automating core Procure-to-Pay processes and enabling a remote workforce for the new business environment.
Organizations of all sizes are incorporating automation in their back office, and this has driven a wide variety of AP automation tool types and an increasingly competitive assortment of software providers.
Source-to-Settle is a competitive field. Providers stand out by taking risks on innovative features for efficiency. Here, we review the tools and topics encountered towards the end of 2019 that we believe are going to be relevant in 2020.
In this whitepaper, Levvel Research details why organizations using MS D365FO should choose a solution that is both advanced in its AP functionality and deeply integrated with MS Dynamics.