5 tips to safeguard your business from AP fraud in 24 hours
AP fraud could happen to any business, at any time. That’s why it’s essential to have a plan in place to protect your business from potential fraud. In this article, we’ll take you through five simple steps to safeguard your company from AP fraud that you can kick off in 24 hours. From risk assessment to automated systems, you’ll learn how to proactively protect your business against fraudulent activity while also gaining the knowledge to implement long-term, fail-safe processes for continued security.
Let’s get started.
Perform a risk assessment
A risk assessment will help you set the foundation for your fraud-prevention strategies. Start by taking a closer look at your financial processes and records to identify any unusual or suspicious activities, or consider hiring an external auditor to carry out a more in-depth investigation. During this discovery phase, aim to keep things simple so that you can build a more comprehensive strategy once you have a better understanding of your current situation.
Start by taking 30 minutes to assess whether the following situations are low, medium, or high risk to your business:
- Employees could create fake invoices or alter legitimate invoices for their personal gain, and have them paid.
- Vendors could submit false or inflated invoices for payment.
- Employees could take cash or goods before they are recorded in the system.
- Employees could create or approve payments to shell companies or fake vendors.
Learn how one Yale employee embezzled $40 million from their employer, how the university reacted, and the warning signs you can watch out for.
Establish stronger controls
To protect your business from fraud, you should first identify weak workflows and isolated manual processes and then work on implementing stronger controls. One way to do this is to set up an approval process for financial transactions with multiple levels of approval and with multiple approvers. You can also create an anonymous system for employees to report suspicious activity and identify it quickly.
By quickly assessing your current state of financial controls and building a plan to make it tighter, you’ll reduce the risk of financial loss and make fraud detection easier. Keep in mind that there are automated AP workflows that flag unusual activity in real-time. Tools like ApprovalMax can help you implement a proactive system that tightens processes for spend control, fraud minimisation, and audit trails using automation.
Provide regular training for your employees
Your employees can be your first line of defence against fraud. Regular training helps employees recognise and report suspicious activity, making them the first line of defence against fraud. By educating them on common red flags and the procedures to follow if they suspect fraud, employees can play a crucial role in preventing fraud and detecting fraudulent behaviour.
Our AP fraud detection guide, “How to identify, detect, and control AP fraud”, can support your employee training efforts. The comprehensive guide offers red flags and prevention strategies to help you educate your employees on specific risks and best practices to prevent AP fraud. Read the guide to learn how ApprovalMax can help protect your company.
Here are just two quick suggestions to help you get started:
- Pick a time this month to set up and send a fraud awareness email to all employees, highlighting common types of AP fraud, what warning signs to look for, and how to report any concerning activity.
- After the email, organise a company-wide training session on fraud prevention and detection within 4 weeks, with a focus on your organisation’s specific risks and vulnerabilities.
Implement automated systems
Preventing fraud is a continuous journey, and incorporating automated systems is a crucial step in keeping your business safe from AP fraud. ApprovalMax, for example, offers built-in fraud detection features that can help protect your business from financial loss, as well as ensures that only pre-approved vendors and suppliers are in your system. Monitoring of automated approval workflows helps to flag suspicious activities, such as duplicate invoices or payments to vendors, and ApprovalMax’s built-in audit trails can help identify any inconsistencies in financial transactions.
Not only do all these steps help to prevent fraud, but it also delivers substantial cost savings and increased protection to your business reputation. Automated systems minimise manual mistakes, accelerate the approval process, and help establish strict processes for spend control and fraud reduction.
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Monitor and review safeguards
Safeguards are only the first step in protecting your business from AP fraud. It’s important to regularly monitor and audit your tools, processes and policies to ensure their effectiveness and to spot areas for improvement.
Here’s what you can do to monitor the performance of your safeguards:
Set a date this week or next week to examine financial records and transactions for unusual or suspicious activities.
Set aside 60 minutes to create a 10-step plan for performing an internal audit to check for inconsistencies and whether or not established controls and procedures are compliant.
Talk to your colleagues and evaluate whether you need an automated tool, such as ApprovalMax. If you are already using a tool, make sure it is functioning optimally as your company grows – our team is always available to help.
Schedule routine updates of controls and procedures, upgrade employee training, and assess the need for new technology or solutions.
By monitoring and reviewing your safeguards, you can ensure that your business remains protected against AP fraud and you will be able to address any issues that arise, helping you maintain a strong and effective fraud prevention strategy over time.
Discover how Le Contrôleur successfully combated fraud with remote approvals and streamlined their financial processes.Read now
Final words: take action to prevent fraud
Defending your business from fraud is a crucial task that requires a proactive approach. By understanding the risks, strengthening controls, utilising industry tools and automation, and monitoring financial transactions regularly, you can implement lasting strategies to protect your business from fraud, with steps you can start taking in just 24 hours. Remember, taking action now will protect your business in the future.