Automation Lowers Invoice Processing Costs While Adding New Tools to Help Companies More Easily Prevent and Detect Fraudulent Activities
WATERLOO, ON, Dec. 17 /CNW/ - U.S. companies lose nearly $1 trillion annually to fraudulent activities that come from their own employees, say top corporate anti-fraud experts. But according to Open Text(TM) (NASDAQ: OTEX, TSX: OTC), a global leader in Enterprise Content Management (ECM), effectively optimizing business processes combined with automation, through solutions such as the SAP(R) Invoice Management application by Open Text, go a long way in helping companies bolster accounts payable (AP) fraud prevention efforts. AP fraud is the single biggest source of corporate theft.
PricewaterhouseCoopers estimates that 61 percent of corporate fraud is perpetrated by companies' own employees in transactions that run the gamut from invoicing scams to setting up and paying so-called shell companies that exist only on paper. About $100,000 on average is lost from each billing fraud scheme - the most common form of fraud affecting AP operations.
"The trend is that internal fraud has increased because many controls have been ineffective," said Peter Goldmann, whose company White-Collar Crime 101 LLC provides fraud-awareness training for corporations. "Studies show that while Sarbanes-Oxley reform has reduced losses from many types of internal fraud, it has not reduced the number of frauds."
What companies are finding is that better processes in accounts payable departments can reduce the likelihood of dishonest employees taking advantage of system weaknesses to their personal, but illegal gains. The starting point, Goldmann and others say, is the invoice. Often it's a paper one that is copied and resent multiple times throughout the submission-to-payment cycle. There are simply too many people touching such invoices - too many opportunities to tamper with amounts owed, addresses, purchase orders, even company names.
"The key is to cut down on 'touch points' by automating," said Tom Walker, Portfolio Manager, SAP AP Solutions at Open Text. "With fewer people handling invoices, there's less chance the dishonest ones will find a way to circumvent the system for their own gain. But that creates its own set of issues, so companies have to be careful. If faulty processes are automated, that just builds in problems that can be both costly and potentially illegal. A prime example of a poor process that could be automated is the single AP employee who has the authority to both receive and approve invoices."
An area where automation can help prevent fraud is by providing a detailed record of every transaction that can then be fed into data analytics programs, according to Gary Moulton, Partner, Forensic and Dispute Services, Deloitte. Real time transaction monitors that allow questionable invoices to be researched before payment, and audit recovery software that looks for anomalies in payment transactions, such as duplicate payment of one invoice, are among the prevention measures companies are finding to be effective.
Optimize and Automate
Efforts such as these alone don't resolve the scope of AP fraud - the gaps in processes that leave the door open to dishonest maneuvers. Large corporations, often with far-flung AP operations that need a complete AP optimization and automation solution, can take advantage of business process integration with SAP Invoice Management. End-to-end invoice management is handled efficiently and securely in the following ways:
- Invoice data can be captured using optical character recognition
(OCR) and document analysis that cuts out the human touches. Data
goes straight through without any human intervention or possibility
of illegal tinkering. The invoices can be entered into the system
anywhere in the world within minutes. A shared-services model is also
possible that would allow standardized processes.
- Once it's entered, the invoice can be judged against multiple
business rules that evaluate meta data to resolve amounts, payments
due, vendor information, and who has the right to resolve
discrepancies, among others.
- Questionable invoices are flagged if they don't meet the business
rules and are then automatically routed to the proper person for
"Corporations running SAP that are striving to meet compliance requirements will find that strengthening their business processes by adding SAP Invoice Management offers the added benefit of preventing some of the most costly types of internal fraud," said Open Text's Walker.
A fully optimized automation program, such as SAP Invoice Management, helps organizations curtail AP fraud occurrences, while providing them significant savings in efficiencies and meeting compliance requirements. As announced in November 2008, SAP resells Open Text's accounts payable solution under the name SAP Invoice Management by Open Text.
For more in-depth information, a white paper titled "Avoid Overlooking the Growing Fraud Threat When Planning AP Automation" and written by Goldmann in cooperation with Walker, is available at www.TheIAPP.org in the IAPP Store.
Further, Goldman, Moulton and Walker discuss AP fraud and automation in a podcast available for download from Open Text at http://www.opentext.com/2/global/news-home/news-podcasts.htm and from SAP at http://ecohub.sdn.sap.com/irj/ecohub/solutions/SAPVIM.
About Open Text
Open Text, an enterprise software company and leader in enterprise content management, helps organizations manage and gain the true value of their business content. Open Text brings two decades of expertise supporting 50 million users in 114 countries. Working with our customers and partners, we bring together leading Content Experts(TM) to help organizations capture and preserve corporate memory, increase brand equity, automate processes, mitigate risk, manage compliance and improve competitiveness. For more information, visit www.opentext.com.
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