Account takeover attacks (or ATOs) and other cybercrimes that target accounts payable processes are difficult to mitigate because they leverage weaknesses in payment processes and other systems, as well as human liabilities. This is why taking proactive action, such as the implementation of an automated payment system is so important and one of the best practices recommended by cybersecurity and fraud professionals.
The following framework presents the specific steps you can take to reduce fraud risks related to payment activity in both your accounting firm and your clients’ businesses.
Step 1: Identify overall areas in which you need to mitigate fraud risks.
According to ACFE, small businesses with fewer than 100 employees have the highest percentage of accounts payable fraud cases and the highest median loss from these crimes. This is why it is so important to help your small business clients flag signs that this type of fraud is occurring. You can use the checklist provided at the end of this report as a starting point to identify red flags and suspicious situations.
Step 2: Educate organizational leaders and employees about the risks of AP fraud.
Beyond the obvious advancement in handling the AP process that automation brings, such as eliminating as much human error as possible, the importance of transitioning to electronic document transmission for sensitive payment information and the ability to provide vendors with a secure environment to exchange their banking and credit information, are other areas that hold high value for many companies.
Another highly valued benefit of providing clients with an improved, more secure AP workflow is the efficiency gained by eliminating duplicate invoices, erroneous payments, missing invoice information as well as the ability to expedite approvals and the accessibility of a cloud-based platform.
Step 3: Implement an accounts payable workflow that supports information security.
Beyond adding value to your clients’ accounts payable processes, by creating efficiency and increased cash flow visibility, an automated workflow serves to support cybersecurity protocols in the payments process. This reduces the likelihood of one of the accounts payable fraud issues addressed in this report from affecting your firm or clients. Implementing a system like Melio, a comprehensive automated payments solution, should be done as part of a business-wide effort and take into consideration other financial systems and processes.
Step 4: Integrate with accounting and other software systems used by your clients and your firm. Building on the previous step, in order to fully benefit from the fraud mitigation process, it is critical that the payments platform you’re using integrates with other key technologies including your clients’ accounting platform in order to have the data securely transferred between these applications.
Step 5. Customize the accounts payable and approval workflow. This is an essential step to mitigate accounts payable fraud and institute accounts payable procedures that align with any existing or new payment policies your firm or clients have in place. (If these don’t exist, you will want to ensure that they are written and implemented). Automated payments workflows should also include approvals based on the vendor, amount, expense type, payment type, and other unique identifiers that reduce the chances of fraudulent activity occurring without it being flagged or halted in the payments workflow.
Step 6. Create a system access and audit trail. Another key point in systematizing and automating the payables process is setting up controlled access and creating an audit trail with the necessary documentation to both reduce and report any suspicious or criminal activity. This is imperative for an automated payables platform.
This framework can be utilized to help you manage your clients’ accounts payable needs providing the control necessary to identify and eliminate as much fraud risk as possible -- one of the highest value services you can offer your clients, especially if they are small businesses where one significant fraud case could negatively impact their operations and financial viability. Learn more about proactive steps you can take to mitigate accounts payable fraud by downloading the ebook An Action Plan to Protect Your Firm and Clients from Rising Accounts Payable Fraud Risks published by Melio.( Click HERE To Download the eBook)