Most of the times, organizations will end-up paying to suppliers that don’t exist. The accounts payable team receives an invoice for goods never purchased. While another executive purchases IT equipment with company funds and gains profit out of it. Yes, there are real stories happening for various reasons. However, in the business world, it is very difficult to avoid – fraud in the business.
Fraud ends up costing companies around 5% of annual revenues each year. It is believed that internal controls can avoid 50% of fraud instances. That doesn’t work for mid-size businesses that have few controls and huge cashflow concerns in place. However, if fraud is slipping through the cracks, it is crucial to control it. Employees, customers, vendors and other sources play the key role in identifying fraud.
Why Most Fraud Control Methods Fail?
With so many ways to commit fraud either intentionally or incidentally, it is difficult for businesses to combat fraud. Audits can spot fraud, but it is not always the best method to prevent fraud. You can audit every transaction from purchase to invoice, but this method doesn’t guarantee accuracy.
You can save time by auditing transactions randomly to find any fraudulent transactions. However, audits are very manual, whether you do it or outsource the task. So, what’s the best strategy to fight fraud? Technology can help you. Automation can easily identify fraud happening within the process, thus preventing huge revenue loss. Machine learning analyzes the user’s spending activities across the entire organization to identify suspicious activities. The capability of looking up for fraud in a comprehensive way is important as employees may find numerous ways of committing fraud.
Around 77% of fraud comes from accounting, operations, sales, customer service, and administrative support and financial operations. It is critical to get all the spend information from multiple departments from a single platform. Certainly, this is one of the best ways to control procurement fraud across organizations.
Leverage AI-powered Audits
By leveraging today’s technology, you can prevent fraud instead of detecting by comparing fraudulent behavior at a granular level and identifying potential fraud activity. Artificial intelligence can aggregate the data and analyze billions of transactions to identify and flag anomalies for your finance department to review. This approach can avoid fraud effectively while allowing resources to focus on company strategy.
AI-powered procurement solutions can help you combat fraud and prevent every dollar from slipping through the cracks.