SUMMARY:

fraud-in-financial-processes

Introduction

Fraud in financial processes: a major risk

Fraud has doubled every year since 2009 and now affects the entire 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 involve fake supplier fraud. What is the preferred entry point for fraudsters? Documents!

Invoices that have been forged or fabricated from different documents or fake bank transfer orders… Fraud techniques that have become widespread due to the rise in digital communication. According to the Association of Certified Fraud Examiners, fraud accounts for more than 5% of a company’s revenue. With such high financial and reputational risks, combating fraud in financial processes has become a critical strategic challenge.

Due to the scale of the risks, manual methods, such as sampling based on subsequent statistical analyses, are now outdated. Effectively fighting fraud involves:

  • Systematic checks,
  • Pre-payment checks,
  • Data checks (consistency checks) and document checks (identification of alterations).

It is essential that these checks are automated, 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.).
  • Stricter compliance rules on payment deadlines (Duty to report, Name & Shame, etc.).
  • Rapid changes in the legislative framework for electronic invoicing (Reliable Audit Trail, Reliable Copy, etc.).

Ensuring compliance with all these regulations and responding quickly to new rules is unrealistic with manual P2P processing.

The first step toward compliance is therefore the digitalization of Procure-to-Pay processes with a solution that is as open and adaptable as possible. This will secure payment deadlines through task automation and real-time management tools. It will also support the duty of vigilance and enhance supplier knowledge (KYS) by collecting supplier documents and sharing them in a centralized system accessible to both purchasing and finance departments.

However, a true compliance strategy requires integrating fraud detection functions into the P2P chain as early as possible. Fraud, in reality, is a form of non-compliance: how can legal regulations be upheld when based on fraudulent information?

As a result, automated validity and authenticity checks for all received documents (certifications, company registration details, IBAN, invoices, etc.) are now essential in P2P solutions.

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