Within every company, there are bills to be paid and debts owed. No organization or individual can exist without owing something in order to receive services necessary to function. Essentially, accounts payable work and jobs have existed as long as standard office jobs have existed, and it has evolved significantly over the years – specifically as technology has evolved and come so far. There is always a demand for checks to be written, invoices to be processed, and information to be stored about suppliers, vendors, and independent contractors completing work for your company. As accounts payable departments have evolved, so has the need to stay updated about its future and how much more it may change with current technology – let’s take a dive into the evolution of accounts payable and how the job description has changed over the years.
Early Technological Development and Hesitance in Accounts Payable Departments
In the early 2000s, AP departments spanning across multiple businesses and industries faced challenges as they began to fall behind the times technologically. With the boom of the world wide web and arrival of modern computers, some AP departments were questionably slower to adapt to the advantage of new systems right at their fingertips. The hesitation for this may not have stemmed from just one reason or concern, but most likely from multiple concerns common among AP workers who found themselves faced with something new and potentially threatening. As we have covered previously, AP automation has never been anything to fear – but originally, workers did not have this information yet. Job security may have been a potential worry and accounts payable departments took their time before finally adjusting and switching over to the modernized workflows we have access to now. The up-to-date workflow of AP departments is thanks to automated processes which have revolutionized accounts payable work everywhere, and this great shift has now allowed finance specialists to focus on high-level tasks, bigger projects to move their company forward, and strategic efforts to aid in overall company success. However, evolution in AP has only just begun.
AP and Finance Specialists are Open to Much More Nowadays
Efforts towards automation within AP departments has propelled many companies forward as their employees’ precious time has been opened up towards so many more opportunities – and these days, AP and finance specialists alike are performing more tasks than ever before. In the modern technological age, there are extremely few AP specialists or finance workers who solely specialize in one thing – workers are now filling more roles than ever, and optimizing the time they are given. Departments are now monitored by financial experts with experience with AP – either internally or externally – who are experienced enough to offer quality advice on how a company can operate better and improve workflows.
How Departments are Shifting Towards more Advisory and Strategic Positions
AP workers will shift into more advisory positions due to automation taking over most of their monotonous tasks deemed unnecessary to be completed manually. Businesses now mainly utilize KPIs (key performance indicators) to measure overall success and performance specifically within AP departments – such as the history of payment transactions, account reconciliation, and cash flow. Accountability within AP departments is boosted this way – with more connections between higher-ups and account managers being able to check in on all processes – and AP professionals no longer lose valuable time or multiple hours performing mundane tasks, but are instead tasked with explaining detailed reports to business stakeholders about workflow and how to make recommendations about improving cash flow and overall business success and efficiency. No longer are AP workers considered to be simple data-keepers or clerks, but moreover strategic minds and partners in aiding in company prosperity.
Different Aspects AP and Finance Experts are Tackling through Newly Presented Opportunities
As AP workers have more options and open schedules, there is added security as employees have the options to guarantee that their companies are complying with local, state and federal regulations. As there are many rules to adhere to and keep track of these days, AP workers have become excellent resources for companies to seek out for compliance. Payment processing alignment is another aspect AP workers can shift their focus to – to help their individual businesses to guide their future purchases – whether by having clear price points, order volumes, and other factors, AP specialists can play a very important role in the process of payments and overseeing mindfulness within broader budgets.
As discussed previously, fraud is also a large challenge many companies and AP departments are facing – so finance specialists can also be resources for fraud detection by keeping a close eye on payments by reviewing, tracing, and identifying check amounts that fall within their responsibility. Corporate strategy is the last but certainly not least component AP and finance experts can guide, as once again, many workers are moving up on the corporate ladder – their work has extended very broadly from small, seemingly meaningless tasks to coming up with ideas and innovative techniques to improve the entire health and advancement of their company. In your own AP departments, you can expect to see vast amounts of digitization and company growth exceeding expectations through a smarter, faster system achieved by automation and the hard work of workers who are multi-faceted in the modern age.
Moving Forward with What to Expect from Your Own AP Department
As AP specialists are continually being valued much higher than they were previously, salaries are increasing and more ways of analyzing data are still being discovered. Keeping an eye on compliance regulations, fraud, strategies for growth, and all payment issues, AP workers are extremely dynamic and should be taken as seriously as any other department worker – with automation being their guide, they are open to an entire new realm of possibilities. It’s essential to keep an open mind as AP departments are being taken in new directions, and to be aware of the changes to come – as more advisory roles are being pushed forward in your companies, be ready to explore their full potential. As your AP departments advance, feel free to reach out to an oAppsNET Partners consultant to learn more today.
Let’s face it, anytime you find out an employee is committing fraud in your company, it hurts. Obviously, it hurts your business by harming your bottom line. However, it can also hurt personally. You spend time vetting employees, hiring them, training them, and then they go and do something to betray all of that trust. Depending on how much trust you’ve placed in them, it can be even more frustrating than what you’d usually expect. Not to mention, it can also make you question just how watertight your operation is. For our last entry in our three-part series, we’re going to cover a source of fraud that sometimes hits on a more personal level–kickbacks.
Kickbacks
Kickbacks occur when your employees get bought off by outside influences. These outside influences provide something like illegal cash payments, bribes, concert tickets, sports tickets, fancy dinners, etc. In return, the employee provides preferential treatment to the outside influence.
Here is a generic example:
You have two vendors pitching bids for your company–Vendor A and Vendor B.
Vendor A does not have as good a pitch as Vendor B.
So, Vendor A goes to one of your employees who is part of your decision-making committee.
Vendor A gives the employee big bags of cash under the table in return for their “vote”.
Your employee accepts the payment and then smooth-talks the rest of the committee (and you) into voting for Vendor A.
The result? You agree to a deal that ultimately rips you off.
Your employee, however, makes out like a bandit.
This scenario shows an example of a common kickback scheme called procurement fraud. It’s one of the most common kickback schemes out there, and it’s one you may have to sniff out at some point. If you have a crew of employees who share the same vision as you, they’ll be more than happy to alert you to something that’s fishy. Once they do that, let the investigation begin.
Epilogue
As we said at the start of this series, life was so much simpler when you had less to worry about as a budding entrepreneur. In a perfect world, we wouldn’t have to deal with fraudsters. Unfortunately, they’re real, but they’re NOT spectacular.
If you do find yourself investigating fraud in your company, remember that two of the most likely reasons the fraud is occurring are:
You have employees who are living beyond their means
You have employees experiencing financial difficulties of their own.
That shouldn’t be terribly surprising. If you’re pushed so far as to worry about your own basic survival, your threshold to follow the law decreases. Simply put, desperation motivates theft.
We’ve given you a lot to keep in mind, a lot to look out for, and a bunch of strategies during this fraud series. Remember, above all else, hire good people and train them to buy into your vision and mission. If you stick to these basic principles, you’ll collectively figure out ways to defend against anything that tries to derail you.
Let’s continue with the second of our three-part series on AP fraud. The last time you heard from us, we offered a general introduction to the different ways fraud can occur within your AP department. Then, we gave you some details on how to prevent Fake Check fraud and Fake Billing fraud. Today, let’s cover two more areas: Expense Account and ACH fraud.
Expense Account Fraud
Let’s say you have a group of employees who do top-notch work for your business every single day. Sure, they have their slip-ups now and then, but don’t we all? Overall, they’re a crew you’d fight for any day of the week.
Being the good boss that you are, you know that the best leaders empower their brightest stars. In return for their good work, you provide your employees lots of opportunities to grow your business with innovative ideas and initiatives. Sometimes, these ideas and initiatives require some testing. Testing, of course, requires resources and time, especially money. That’s okay, though. It’s worth it because you’re potentially investing in your company’s future.
Now, let’s also say that while you’re giving your employees some leeway to get creative, they incur some expenses while trying to test their solutions. Depending on how adventurous a company you are, these expenses could be something small like a business dinner with a client, gas mileage reimbursement, or basic office supplies. Expenses can also be something larger, though, like a luxury suite at a professional sporting event. Typically, either way, you’ll be happy to reimburse your employees for their purchases if they provide receipts. After all, they’re working to grow the business.
But what happens if an employee lies about these expenses? What if they claim they bought something they didn’t actually buy? What if they request a check to be reimbursed for something that never happened? These lies end up as fake expenses. If you’re not careful, your AP department could end up cutting your employee a check for doing absolutely nothing and lying to you about it.
So what can you do about preventing these internal schemes? Here are two fixes that will give you far more control over the situation.
Hire or train an internal auditor. Give that auditor regular access and ability to verify every single transaction between a company and an employee. If you need to cut a check for expense reimbursement, the auditor signs off on it only after they get clear proof (e.g., receipts) that the request is legitimate.
Train your entire AP department on the non-negotiable requirements for expense reimbursement. Every single member of your AP department needs to know what counts as proof for reimbursement and what doesn’t. If multiple members of your AP department can’t agree that a reimbursement is legitimate, then the request goes back to the employee with a request for more specific information.
These internal controls work, too! Last year, the AFCE found that 43% of all fraud schemes were detected by a tip, with over half of those tips coming from internal employees. Trust your good ones. They want to be part of a successful business just as much as you do.
ACH Fraud
Thank goodness for the automated clearing house, right? Thanks to the ACH, you can just directly deposit your employees’ salaries into their bank accounts at a moment’s notice. No trips to the bank, no lost time to printing and reprinting checks, more convenience for everyone.
Oh if only it were bulletproof. In 2018, the Association for Financial Professionals’ Payments Fraud found that 33% of organizations were subject to ACH fraud. That was up from 20% the year before.
To be fair, though, ACH setups are usually pretty secure and difficult to hack. With that said, it’s not impossible. Here’s what some crooks have done to ACH systems in the past:
A hacker breaks into the system, accesses employee credentials, and generates an ACH file in their name.
The same as above except the hacker sets up an account as an automatic bill pay recipient.
An employee handling ACH transactions clicks on a link with a virus that tracks their typing on the keyboard and sends it back to the hackers. Many times, this typing log includes sensitive information like account passwords. The hackers then access your software, impersonate the employee, and set up payments to themselves.
Who better to help us monitor ACH fraud than the FBI? Here are some really simple recommendations with long-term benefits:
Reconcile ACH accounts frequently.
Set strong passwords, change them often, and store records of them in secure locations.
Consistently update your firewalls and antivirus software.
Designate certain computers as “ACH Work Only”. That way, you don’t have to worry about careless internet browsing handing you over to fraudsters.
Life used to be much more simple when you gave your best friend a few bucks out of the till because they helped you hock lemonade during summer vacation. You knew where every dollar went within your business, and no one had a prayer of stealing your jar of cash out of the fortress of security known as “under your mattress.” Unfortunately, the simple quid pro quo days of childhood only last so long.
Last year, the ACFE found over 2500 cases of fraud among 125 countries that resulted in $3.6 BILLION worth of loss. That’s billion with a “B”. Today, businesses are at risk for fraud from a seemingly endless supply of sources. Some of them are painfully obvious:
The Nigerian prince with a newfound interest in underwriting.
The diligent employee who’s stuck in a meeting and needs you to buy gift cards because it’s VERY important.
The Powerball drawing in Peru that gave your company a win without even purchasing a ticket.
Of course, other sources of fraud are not so obvious on the surface. They’re problems that can be hard to track while they’re wreaking havoc on your business. Nevertheless, it’s these problems that demand your highest awareness. We’re talking about:
Fake Check and Altered Check Duplicity
Fake Billing Chicanery
Expense Account Thievery
ACH Trickery
Kickback Skulduggery
Over the next few articles, we’re going to go in-depth on how these problems occur, how you can catch them, and what you can do to minimize the chances of them hurting your business. Today, we’re focusing on fake/altered checks and fake billing–two sources of fraud that can occur outside the walls of your business.
Fake/Altered Checks
Check fraud runs rampant in a number of ways. A person can wrongfully endorse a check, write a check on a closed account, print counterfeit checks, and even use chemicals in highly sophisticated operations to remove important information. (If MacGyver can do it, so can fraudsters.)
Part of the problem lies in the widespread use of checks. More checks=more chances for fraud to occur. In 2018 alone, the Federal Reserve reported 14.5 billion check payments totaling almost $25.8 trillion. While those numbers do show a decrease from 2015, the bottom line is that businesses still write a ton of checks that can be intercepted by criminals just waiting to pounce. If you own a small business, the ACFE says you’re four times more likely to encounter check fraud.
The news is not all bad, though. In fact, smart business can take a series of steps to prevent check fraud. A number of the methods listed below are just good business practices. Some require more work on your part to implement them. Either way, they’re all worth considering.
Convert payments to ACH and/or similar electronic ways
Reconcile your accounts as soon as possible
Use securely connected online reporting systems
Have separate accounts for transactions–one for paper and one for electronic
Implement ACH Blocks and Filters
Fake Billing
Over time, as you build trust with vendors, it gets easier and easier for AP employees to approve payments quickly. Time is money, right? Unfortunately, certain vendors abuse this trust by sneaking in fake services and driving up the invoice totals.
The trickiest fraudsters slowly increase the total so that you won’t notice right away. For example, a recurring $100 monthly payment becomes $110 for no reason or for some fake service the vendor didn’t provide. No one in your business cares to look into it because who has time to chase down 10 dollars? As time goes on, $110 slowly creeps up to $120. A few months later, it’s up to $160. By the next year, it’s up to $210. The growth is so slow that you don’t see it until the damage has been done.
It’d be nice if that was the only source of this garbage. Unfortunately, it’s not. You also have to contend with fraudsters impersonating vendors, email hacks (phishing), and fake email domains created by crooks that look similar to your actual vendors’ email addresses. Oh, and if you’re a small business? The ACFE says you’re twice as likely to get duped here.
So what can you do here? As it turns out, plenty. What we’re suggesting here isn’t that difficult, either. It just requires a good detail-oriented team that’s been given sufficient training in the following practices:
When you receive a bill, email and telephone the vendor to confirm they sent it.
If a vendor’s contact info appears to be different than what you have on file, attach all original paperwork for your controller so that they can verify the bill is legitimate.
Keep a “security” question on file that only the vendor would know. Ask them the question via email or over the phone to confirm it’s them.
KEEP YOUR TEAM IN THE LOOP! The longer you keep a known fraud attempt secret from your trusted employees, the higher the chance they’ll make an unfortunate costly mistake.
Are there pro’s/con’s to using multiple queries vs. a single query with joins in a report?
How best to manage groups of data so that little or no intervention is needed to the report layout.
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Layout (grouping, breaks, use of different formats, page setups)
Creating and dropping temp tables in reports. Doing massive amounts of “setup” queries before the reports can be generated. Or, failing that, calling a report from PL/SQL.
