Understanding how accounts payable (AP) automation benefits security is extremely important in today’s climate, as criminals are upping their game to take advantage of new opportunities.
Organizations must protect not only their employees, but also their financial data and personal information. Otherwise, they stand to take financial loss, in addition to loss of reputation and trust, in the event of a data breach.
Fortunately, AP automation benefits security by providing powerful cloud-based technologies to replace manual, paper-based processes that are susceptible to human error and tampering, and creating efficiencies that improve accuracy, visibility and control.
Why Financial Security Has Become an Even Bigger Priority Today
Since the COVID-19 pandemic started, IBM Security has observed a more than 6,000 percent increase in cybercrime spam.
They found that nearly 40 percent of study participants believe they’ve been targeted with COVID-19 spam emails, such as phishing campaigns that promise a loan or stimulus check in exchange for clicking on an embedded link. Clicking triggers a malware infection that spreads through an employee’s device, giving criminals access to a goldmine of information.
And fraudulent AP activities— including malware, check tampering and Business Email Compromise (BEC) — plague organizations regardless of their size or industry. According to JP Morgan’s 2019 report on fraud, 81 percent of companies were targets of payments fraud last year.
It’s perhaps more important than ever for organizations to increase their security efforts to protect their employees and their businesses, leveraging tools and technologies at their disposal.
How Moving to Accounts Payable Automation Benefits Security
Organizations rely on many tools and strategies to prevent and mitigate fraudulent activity. AP automation has become an important component of their security fortification for good reason. Here are four distinct ways AP automation benefits security:
1. AP Automation Eliminates Paper Checks
An Association of Financial Professionals survey on fraud points to paper checks as the largest vehicle for payment fraud. In fact, about 75 percent of businesses that were victims of accounts payable fraud were targeted via checks which provide an easy way to replicate vital vendor and account information.
Attempted check fraud rose to $15.1 billion in 2018, up from $8.5 billion in 2016, providing treasurers plenty of motivation to switch to automated, more secure payment methods.
One of the biggest benefits of accounts payable automation for security is removing paper-based, manual processes that are riddled with risks. In their place, the right software solution will provide secure, automated processes along with encrypted and verified electronic payment options.
Unlike paper checks, electronic payments like ACH and virtual cards are routed digitally from one bank account to another through payment systems. Most use automated fraud monitoring tools like Positive Pay to flag suspicious activity and avoid duplicate payments and invoices. Simply stated, payments are controlled from start to finish, and risk is mitigated.
2. Removing Manual AP Processes Reduces Errors
Accounts payable and accounting teams work diligently to ensure payment information is recorded correctly, manually entering data into their ERP or relying on a spreadsheet to keep them organized and accurate. Despite their abilities and diligence, their work is prone to errors.
Working from home makes it even more challenging. With more distance between AP teams and separation from data sources, suppliers and approvers, it can be easy to overlook important information or make mistakes that compromise security without realizing it.
Automating replaces the grunt work, like invoice entry, coding and matching, and in turn eliminates mistakes that are inherent to those manual processes. When AP is cloud-based and centralized, nothing slips through the cracks, is duplicated or forgotten.
3. AP Automation Improves Internal Controls
Most businesses depend on controls—like requiring department level approvals, matching invoices to purchase orders, and granting the CFO sole responsibility for signing checks— to securely process invoices, pay bills and protect against fraud.
While intentions are good, these controls are challenging to organize and maintain, especially when the number of invoices multiplies and when constituents are physically separated from each other.
Another massive security benefit of accounts payable automation is it allows CFOs and controllers to safeguard sensitive financial information by setting strict guidelines and controls around who in the organization can access it. They can embed payment controls, like segregation of duties and dual-factor authorization, into automated processes that happen repeatedly. They can also add security layers that require multiple approvals and send alerts when suspicious activity is flagged.
4. Automated AP Provides Better Visibility
When relying on manual invoice entry and file cabinets for storage, it can be difficult to perform invoice approvals and research working remotely. Access to invoice images and other important invoice information is limited, if not impossible to access. The same can be said for payment processing. How do you provide a cleared check image to a vendor if they are stored in a cabinet at the office?
Centralized AP processes provide clear visibility and accountability, making it easier to monitor for fraudulent activity. Teams can easily receive, track and approve invoices with clear visibility into invoice and payment status, regardless of their location, and can scan for duplicates, errors, and suspicious activity.
Accounts Payable Automation Offers an Impressive List of Security Benefits
As you can see, the benefits of accounts payable automation for security extend throughout the entire bill pay and invoicing cycle. It’s an important tool in the fight against fraud, eliminating error-prone manual processes, replacing paper checks with more secure electronic options, improving controls to safeguard sensitive information, and providing clearer visibility to better monitor activity.
If you’re interested in protecting your business by moving to automated invoice and payment processes, we can help! Check out AvidXchange’s suite of AP automation software solutions or schedule a demo today to learn more.