Over the last decade, it has become apparent that automating the accounts payable process can significantly improve an organization’s overall financial operations. Automation adds significant value to accounts payable, including real-time visibility into performance and financial status, increased accuracy, and better compliance with tax laws and industry regulations.
If your property management group is still receiving paper bills, you’re not capitalizing on today’s best practices. You’re also missing out on the unlimited potential for savings after relieving your AP team of time-consuming tasks such as opening the mail, data entry, and filing mountains of paper.
Applying automation to your payment processes means eliminating paper invoices and checks from your organization entirely, while reducing your processing costs by more than 60 percent along the way.
In this article, you’ll learn:
- Why companies still use checks.
- How paper-based transactions put your property management group at risk for Business-to-Business (B2B) fraud.
Why do companies still use checks?
Well, let’s start with the obvious—people hate change. There are existing business processes tied to a company’s payment process, so you can’t just say, “Today, we’ll pay our bills a different way than using paper checks.” Approval processes have to be updated, new vendor data has to be obtained and maintained to submit payments in an electronic method, and let’s just be honest—you probably have a mountain of pre-printed check stock in an office closet that you’d hate to see go to waste.
According to the Wall Street Journal, there are over 300 thousand small- and medium-sized businesses (SMBs) in the United States that have yet to automate their payment process. U.S. companies lag behind their counterparts in Europe, Japan, and Brazil when it comes to ePayments.
In the article, U.S. Companies Cling to Writing Paper Checks, it states, “American businesses and consumers wrote 21 billion checks in 2012, according to the Federal Reserve.” That’s downright scary, considering it’s more than four times as many checks as were written that year in the European Union’s 28 member countries!
For example, Goodyear Tire & Rubber Co. still pays more than 50 percent of its invoices with checks, even though the cost of writing a check is as much as five times that of an ePayment.
How do paper-based transactions put your property management group at risk for B2B fraud?
Apart from the other benefits of electronic payments, such as more visibility into payment status, cost savings, and improved controls, electronic payments also reduce fraud. How? Because they take the paper out of the process. So, why is paper a problem?
In a paper-based environment, your property management group’s documents are constantly at risk. Physical copies of sensitive information can be easily misplaced, altered, or destroyed. If these documents are lost or tampered with, then you no longer have access to the data necessary to effectively operate your properties.
Research has shown that paper documents and checks are leading sources for fraud, because data is not protected. In fact, 48 percent of payment fraud can be tracked back to paper checks. According to a recent survey by the Association of Certified Fraud Examiners (ACFE), nearly 70 percent of corporate respondents have been victims of check fraud.
According to a recent public service announcement by the Federal Bureau of Investigation (FBI), there has been a 270 percent spike in B2B fraud since last January. This alarming growth in fraud is largely due to B2B invoice scams like the business email compromise (BEC) scheme. The BEC is a sophisticated scam targeting businesses working with foreign suppliers and/or businesses that regularly perform wire transfer payments.
How can you protect yourself from B2B fraud and invoice scams? Be suspicious of requests for secrecy or pressure to take action quickly. Always verify changes in vendor payment location and confirm requests for transfer of funds before processing payment. The FBI also suggests creating intrusion-detection system rules that flag emails with extensions that are similar to company email but not exactly the same. For example, .co instead of .com.
You can accomplish these necessary security tasks by automating your accounts payable process. Automation enforces strict adherence to business rules, reducing opportunities to commit B2B fraud. Manual processes rely on post-payment review to detect deviations from business rules. By the time you’ve detected an issue or discovered an error, the fraud has already occurred.
Want to learn more about how you can help your property management group prevent fraud?
Article contributed by AvidXchange’s Jen Ittenbach.