SUMMARY:

fraud-in-financial-processes

Introduction

Fraud in financial processes: a major risk

Fraud has doubled every year since 2009 and now affects the whole world. According to the Euler Hermes – DFCG Survey 2020, 7 out of 10 companies have been victims of attempted fraud and half of these attempts concern fake supplier fraud. What is the preferred entry point for fraudsters? Documents!

Invoices that have been forged or made up from different documents or fake bank transfer orders… Fraud techniques that have become generalised by the increase in digital communication. According to the Association of Certified Fraud Examiners, fraud represents more than 5% of a company’s turnover. With such high financial and reputational risks, combating fraud in financial processes has become an essential strategic challenge.

Due to the scale of the risks, manual methods, such as sampling on subsequent statistical analyses, are now proving outdated. Fighting effectively against fraud involves:

  • Systematic checks,
  • Pre-payment checks,
  • Checks on the data (consistency checks) and on the documents (identification of alterations)

It is essential that these checks are automated and take place upon receipt of documents and are embedded in the AP automation solution.

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Détection des risques : Comment rendre votre processus Procure-to-Pay infaillible ?

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Did you know?

9 out of 10 companies fear an increase in the risk of fraud

Source Euler Hermes - DFCG 2021

Perspectives

Fraud and compliance: 2 sides of the same coin

The Procure-to-Pay process environment is becoming increasingly regulated: 

  • Increased obligation of vigilance with respect to suppliers (CSR, AML/CFT, combating concealed employment, etc.)
  • Tightening of the compliance rules on payment deadlines (Duty to report, Name & Shame…)
  • Accelerating changes to the legislative context on electronic invoicing (Reliable Audit Trail, Reliable Copy...)

Guaranteeing compliance on all these points and being reactive to the new rules is unrealistic in the context of manual processing of P2P.

The first stage for compliance is therefore digitisation of Procure-to-Pay processes with a solution that is as open and adaptable as possible. It will secure payment deadlines through task automation and real-time management tools. It will help with the duty of vigilance and improved supplier knowledge (KYS) via collection of supplier documents and sharing in a reference system that is common to the purchasing and finance departments.

However, a real response to the challenge of compliance involves integrating fraud detection functions in the P2P chain as early as possible. Because fraud is in reality a form of non-compliance: how can the legal regulations be respected on the basis of fraudulent information? 

In fact, automated validity and authenticity checks for all documents received (certifications, company registration details, IBAN, invoices…) are now essential in P2P solutions.

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fraud-compliance-obligation-vigilance

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