New Year, New Accounts Payable Fraud Prevention Practices

Thu, Jan 11, 2018 @ 01:38 PM

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Accounts Payable - Fraud Prevention - Risk Management - AP Fraud

According to the 2017 ACFE Report, more than 23% of all occupational fraud cases resulted in a loss of $1 million each.

Fraud prevention is a constant process, especially in the growing digital world. The company you choose to do business with should take your protection seriously, have the highest security standards possible, and alert you immediately if there is any suspicious account activity. Knowledge and awareness are the strongest defense against fraud scams, especially when used for issuing ACH (Automated Clearing House) payments.

With 2018 among us, start the new year off right by following these seven tips to protect your accounts payable department from identity theft, frauds and scams.

1. Positive Pay - Use this tool when issuing check payments to create a file that ensures your bank only accepts checks that match check numbers, dates, dollar amounts and the payees.

2. Separation of Duties - Critical for larger departments, but very effective in any business setting. Don't allow one person too much control over issuing payments. Instead, have one person input payments, another approve (see next) and a third actually issue payments to resolve many security concerns.

3. Multiple Levels of Approval - Don't depend on one person approve transactions. Better yet - have approvals go through multiple levels, especially for a very large transaction. If necessary, demand a hand signature for very high dollar check payments.

4. Secure Data Transmission - Ensure that your payment system will securely transfer data over the network and directly to your financial institution or your off-site check print and mail facility with SFTP (SSH File Transfer Protocol, or Secure File Transfer Protocol) and the highest security encryption standards.

5. Audit Trail Reporting - This practice is nothing more than an electronic "paper trail." An AP manager should be able to go behind employees to see who's creating, approving, issuing and even cashing items. This is a good practice not only for mitigating security concerns, but for also satisfying auditing requirements.

6. Employees Take Vacation - Everyone should want a break from work sometimes. Be aware if you have an employee or group of employees that never want to take vacation, they may have a hidden agenda.

7. Always Investigate Email Urgent Requests for Payment - Advise your team that under no circumstances should an URGENT request for a payment be issued without several levels of investigation and authorization. Even when the request appears to be from the CEO, all payments are issued only after following the protocols recommended above.

Following these simple steps will put your mind at ease and help keep you free from fraud and scams while keeping your privacy protected. Here at OnPay Solutions, protecting your personal and financial information is our highest priority. It is important to remember these tips this holiday season because cyber-crimes never take a break even when you do.

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