Are you an unknowing victim of AP fraud?
Cole Sperry
Job Search and Careers Blogger with 360,000+ Readers | I build the blogs you'll read tomorrow | Recovering Recruiter.
Accounts Payable (AP) is particularly vulnerable to fraud from inside and outside your business. Just think about all the money that flows out of a business, from vendors and suppliers to utilities, rent and loan payments - every dollar that a company spends goes through AP. Check tampering alone results in a median loss of $158,000 per business according to the ACFE's 2016 report.
So what is AP Fraud?
AP fraud involves a wide range of check tampering cons, billing schemes, and travel & expense reimbursement scams. The Association of Certified Fraud Examiners (ACFE) provides the following definitions of these forms of AP fraud.
- Check Tampering Scheme - a person steals his/her employer's funds by intercepting, forging, or altering a check.
- Billing Scheme - a person causes his/her employer to issue a payment by submitting invoices for fictitious goods or services.
- Expense Reimbursement Scheme - a person makes a claim for reimbursement of fictitious or inflated business expenses.
J.P. Morgan Chase estimated that businesses spent $186B in T&E expenses. Of that, $1B can be attributed to fraud.
5 Ways to Detect AP Fraud
- Consider the human element.
- Verify your vendors.
- Test transactions.
- Monitor financial ratios.
- Review write-offs.
For a complete guide to identifying & preventing AP Fraud, reach out and I'll send you a complimentary booklet that we, in collaboration with some great CPAs and CFOs, put together this month. It's a great piece with ideas on conducting a risk assessment and ways to immediately begin preventing AP fraud.
-Cole