During these challenging times, construction companies must protect not only their employees, but also their financial data and business information. Criminals are upping their game to take advantage of new opportunities, making fraud a top concern.
According to The Association of Certified Fraud Examiners, a single data breach can cost construction companies roughly $330,000, not to mention damage to their reputation and customers’ trust. Accounts payable (AP) automation can help them boost security by providing powerful cloud-based technologies to replace manual, paper-processes that are susceptible to human error and tampering, and creating efficiencies that improve accuracy, visibility and control.
Let’s take a closer look at how AP automation can benefit security and mitigate fraud risks in the construction industry:
E-Payments are Safer than Paper Checks
According to an Association of Financial Professionals survey on fraud, about 75 percent of businesses that were victims of accounts payable fraud were targeted via paper checks. Checks provide an easy way to replicate vital vendor and account information.
With check fraud on the rise, construction owners and operators are motivated to switch to an automated, more secure payment method to pay their vendors and suppliers.
Payment automation replaces paper and manual processes that are riddled with risks with secure automated processes and offers vendors encrypted and verified electronic payments. Electronic payments like ACH are routed digitally from one bank account to another through payment systems, and most use automated fraud monitoring tools like Positive Pay to flag suspicious activity and avoid duplicate payments and invoices. Payments are controlled from start to finish, and risk is mitigated.
Eliminating Manual Processes Reduces Errors
Firms work diligently to ensure invoice and 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 or from job sites distances AP teams from their data sources, like files and the mailroom for invoices and checks, making it easy to overlook important information or make mistakes.
Automating replaces the grunt work, like invoice entry 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.
Automation Improves Internal Controls
Most businesses depend on controls—like requiring multi-level approvals, matching invoices to purchase orders, and granting an owner 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 teams are physically separated from each other.
Centralized AP allows business leaders 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. Management can also add security layers that require multiple levels of approvals, increasing visibility to workflow payment schedules while maintaining current routing policy and procedures.
Going Automated 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, which is often the case on job sites. 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 file folder at the office?
Centralized AP processes provide clear visibility and accountability, making it easier to monitor for fraudulent activity. Owners and contractors 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.
AP Automation Offers an Impressive List of Security Benefits
Security benefits from AP automation exist throughout the entire bill pay and invoicing cycles. It’s an imperative tool in the fight against financial 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.
Learn more about how fraud may continue to impact businesses from cybersecurity expert and subject of Catch Me if You Can, Frank Abagnale by watching our on-demand webinar, here.
And if you’re interested in protecting your business by moving to AP automation, AvidXchange can help.