ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Why Today's Companies Are Automating Their Accounts Payable

Updated on February 7, 2019
Sarah Vallory Draper profile image

Sarah V. Draper is a professional copywriter and freelance investigative journalist whose passion is communicating with the world.

Source

According to Forbes, companies across all sectors are finding that the benefits of automation have increased security, productivity, continuity control, and profitability.

One of the most affected by the automation of business is accounts payable.

In this article, we wish to discuss five reasons every business should switch to accounts payable automation.

Automation Of Accounts Payable Offers Security

One of the most prevalent crimes committed against a company is accounting fraud.

In an article posted by lexology.com in 2014, according to PWC’s 2014 Global Crime Survey, accounting fraud went from 16 percent in 2011 to 23 percent in 2014 - nearly a one-third increase.

The PWC admits that this increase has to do in part with “more regulation, stricter enforcement, and increasing investigations.”

This means that some of the increase in accounting fraud cases involve companies and law enforcement taking better measures to detect such activities.

The report goes on to point out that companies are employing or enhancing internal controls, implementing more rigorous risk management and compliance programs.

What’s more, 54 percent of U.S. companies that responded to the study admitted to losing between $100,000 to fraud.

Another 8 percent reported losing as much as $5 million or more to fraudulent activities by employees.

But it wasn’t just monetary loss that affected these companies. There were a number of “indirect” impacts on them as well.

  • Eleven percent suffered adverse effects on relations with regulators
  • Thirteen percent suffered a negative impact on their brand’s reputation
  • Ten percent of their business relations were hurt
  • Eleven percent reported it decreased employee morale

Source

Some Schemes To Keep An Eye Out For

There are a few schemes that crooked employees and accountants use to get over on a company.

Some of these are easy to catch. For savvy perpetrators, some schemes can go unchecked for years.

Personal Purchase

This is where an employee orders a personal item(s) on behalf of the company’s name and account.

With more and more companies giving out company credit cards (procurement cards), this has become more prevalent than the previous method of creating fake invoices.

Check Tampering

This form of fraud can take on a few forms:

  • Employee steals blank checks from the company and inserts his/her name or the name of an accomplice.

  • An employee may intercept an outgoing company check and forge the endorsement and deposit into their own bank account or into an accomplice account.

  • One of the most difficult forms of this kind of fraud is when the fraudster actually takes bank account numbers and routing numbers, then totally reproduce the checks on check stock purchased from an office supply store.

Fraudulent Expense Reimbursement

This is a common form of employee fraud.

It involves employees filing inflated or false expense reports requesting reimbursement for personal meals, hotel rooms, travel expenses, and other “work-related” quasi-business goods and services.

Fake Vendor Scheme

This sort of scheme can drain a company to the point of bankruptcy.

An employee who is savvy enough creates a bogus vendor and bills your company for goods and services that don’t exist.

These sort of schemes can also include inflated market prices on the invoices for goods and services delivered (also referred to as a pass-through scheme).

Source

Not All Accounts Payable Mistakes Are Malevolent

Majority of errors in the accounts payable department are purely done by mistake.

Accounting is already a tough job for even the seasoned accountant.

Some common mistakes done in accounts payable are:

  • Making copies of invoices. This can cause your company to pay an invoice twice.Employing one person to handle accounts payable. Most companies want to save money, and the first method is cutting employees.
  • Failing to close a purchase order. Once you receive the goods or services, your company cuts the check, then the accounting department must close the purchase order right away. If not, this can lead to your company paying twice for something.

  • Late payments. Forgetting to pay your bills because invoices get misplaced or filed in the wrong manner can cause your credit standing to suffer. The most important thing your business should do is to pay bills on time.
  • Failure in communication. Communication can fail at any point in your business. Whether it is internal or between your accounting department and other companies, gaps in communication happen. Communication is the key to any business, so it is important to get it right the first time.

The consequences for bad accounting can be steep - it can even cause you to lose your business.

Heavy fines and legal action could be brought against you simply because of the actions of others within your company.

Companies are finding that AP automation software is the key to securing their company from fraudulent and/or clerical mistakes.

Not only that but accounts payable automation can protect them from possible legal fines or liability due to these unforeseeable issues.

This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

© 2019 Sarah Draper

Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://maven.io/company/pages/privacy

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
    ClickscoThis is a data management platform studying reader behavior (Privacy Policy)