With nearly US$1 trillion lost annually to fraudulent activities in the United States alone, and with a large percentage of corporate fraud stemming from companies’ own accounts payable (AP) employees, it’s no surprise that corporate forensic accountants are taking a much closer look at the business processes that support AP departments. Experts at the Association of Certified Fraud Examiners estimate that, on average, about US$130,000 is lost to every AP-related fraudulent act.1
Why Is AP So Vulnerable to Abuse?
Most individuals on the internal AP staff have the access and the authority needed to commit fraud if they want to. And they have been given ample opportunity to do so: Most invoices are still received and processed in paper form at some point in the submission-to-payment cycle, and paper invoices are inevitably copied and re-sent multiple times. There are simply too many people touching too many paper invoices — and too many opportunities to tamper with amounts owed, addresses, purchase orders, and even company names.
On top of that, the complexities and scope of business operations now span the entire globe, so there are even more opportunities for fraud. The increasing global nature of business presents an even greater need for organizations to have end-to-end visibility and audit control built into their AP processes.
A number of tactical approaches can help cut down on fraudulent activity, but to truly close the gaps that serve as an open invitation for those interested in taking advantage of laxly controlled AP processes, the trick is to cut down on manual touch points.
Automation therefore seems like the obvious answer — but automating alone will not resolve the issue completely or stop criminal activity. If you automate a bad process, you will simply end up with a faster bad process. First, you’ll need to optimize AP.
Avoid Automating a Flawed AP Process: Optimize First
To optimize your AP process, I recommend taking advantage of the SAP Invoice Management application by Open Text. SAP Invoice Management helps set the stage for a 360-degree view of the complete invoice management life cycle by enabling a securely handled end-to-end process.
To facilitate efficient operations, reduce costs, and improve vendor relations, the application focuses on optimizing four key areas:
- Processes: The solution standardizes and automates the AP process; it also streamlines workflows and any remaining manual touch points.
- IT systems: SAP Invoice Management integrates with your existing systems and processes and provides flexible configuration and a single point of support to solve any issues that might arise.
- Insight and control: The solution provides performance indicators for easy status and trend analysis, rule-driven exception processing, and centralized process management capabilities.
- Organization: With SAP Invoice Management, you can assign users responsibilities based on their roles and their involvement with suppliers, all while maintaining proper segregation of duties.
Automate Your Optimized Process
SAP Invoice Management automatically captures invoice data using optical character recognition (OCR) and document analysis to eliminate human touch points. This way, data goes straight through the AP process without any human intervention or possibility of illegal tinkering (see Figure 1). As a bonus, the invoices can be entered into SAP Invoice Management — within minutes — from anywhere in the world.
||SAP Invoice Management’s automated paper-to-post process offers optical character recognition (OCR) to reduce human intervention and prevent fraud
SAP Invoice Management can then judge the invoice data against multiple business rules that evaluate metadata to determine amounts, payments due, vendor information, and who has the right to resolve discrepancies, for example. The application also flags questionable invoices if they don’t meet the business rules and automatically routes them to the appropriate person for examination.
Ensure Process Compliance Globally
The global business environment dictates numerous regulations, such as the Sarbanes-Oxley Act, with which AP must comply. SAP Invoice Management provides the control needed to implement a compliant, well-managed AP process based on preconfigured business rules. This built-in rules engine makes the reconciliation process simple, cost-effective, and fraud-proof, with visibility and analytics for internal or external audits and compliance (see Figure 2). You can also produce extensive reporting on the process, including a complete audit trail.
Such a central, standardized process, with accurate information, fewer errors, and timely reporting, lessens your risk of noncompliance and litigation.
||SAP Invoice Management’s built-in business rules check ensures compliance in the reconciliation process
Spend Less Time on Fraud Detection, More Time on Business Improvement
A fully optimized automation program like SAP Invoice Management helps organizations curtail AP fraud occurrences while meeting compliance requirements and providing significant savings through improved efficiencies. Streamlined invoice processes reduce the number of petty issues that arise, so you can focus on what’s important in your relationships with your vendors and partners.
To learn more about SAP Invoice Management by Open Text, visit http://ecohub.sdn.sap.com/irj/ecohub/solutions/SAPVIM.
Bil Khan (firstname.lastname@example.org) is a marketing leader with a record of driving profitability, expanding market share, and spurring global growth for high-tech entities by implementing pragmatic, strategic, and tactical programs and initiating effective partner and reseller relationships. He received his MBA in marketing from Pennsylvania State University and earned his bachelor’s degree in electrical engineering from the University of Arkansas.
1 See the Association of Certified Fraud Examiners’ “Report to the Nation 2008” for more information. [back]