Here’s How Business Process Automation Can Help Large Corporations Catch Errors, Fraud, and Theft
The larger a company grows, the more complex the business processes become. As budgeting, purchasing, expense reporting, accounting, and payments become more complex there’s a greater risk that errors, fraud, and theft could go unnoticed.
Without careful oversight, it’s easy for errors to creep into spreadsheets, unethical spending to fly under the radar, and fraudulent requests to slip by. Even the most vigilant employees won’t be able to catch every issue in a spreadsheet or paper-based process. Digitizing financial processes helps, but that’s still only as good as the process you’re using to track and check the digital information.
What you need is an end-to-end business process automation (BPA) solution that gets your budgeting, capital expense (CapEx) management, procurement, and payments systems working together to strengthen internal controls and provide layers of oversight. With process automation software providing more accurate and accessible data, and monitoring transactions automatically, the software system reduces the risk of errors and fraud. It also empowers employees and managers to notice errors, fraud, and theft more quickly.
The Cost of Errors and Fraud
According to a variety of studies, 88% of Excel spreadsheets contain “significant” errors. Most of these are caused by human error—it’s just hard for people to catch every typo they could make, particularly in large spreadsheets. In small companies the financial loss may be minimal, but for larger corporations spreadsheet errors can snowball into huge financial losses. For example, spreadsheet errors played a significant role when JP Morgan lost $6 billion in the “London Whale” incident.
In other cases, the errors are intentional rather than accidental. According to the Association of Certified Fraud Examiners (ACFE)’s “Occupational Fraud 2022: A Report to the Nations,” organizations lose about 5% of their revenue to fraud every year. The most common type of fraud (86%) is “asset misappropriation,” such as fraudulent expense reports. These types of fraud result in a median loss of $100,000. “Financial statement fraud” is less common (9%), but has a much higher median loss of $593,000 per case.
Though the exact numbers will vary from case to case, it’s clear that unintentional errors and intentional fraud can both cause large financial losses. And the longer they go unchecked, the greater the damage will be.
Ways to Catch Errors and Fraud
ACFE’s “Occupational Fraud 2022” report also reveals that anti-fraud controls do reduce the risk of fraud and speed up fraud detection. 29% of the cases they examined related to a “lack of internal controls,” while in 20% of cases the perpetrators overrode existing controls. Strengthening controls and empowering employees to make email and web-based reports of suspected fraud has the potential to greatly reduce the risk of fraud and increase detection.
Tips are by far the most common method by which fraud is initially detected (42% of cases). Internal audit (16%), management review (12%), and document examination (6%) are the next most common detection methods. By a wide margin, employees who notice something suspicious and tip off the company are the most common way to catch fraud.
Here is one of the big ways that BPA software can help. As you might know if you’ve been reading this blog, process automation doesn’t replace human employees. It provides tools to make their jobs easier. These tools include layers of oversight to help catch mistakes, numbers that don’t make sense, and fraudulent documents.
BPA Tools At Work
It’s a lot harder for fraudsters and thieves to hide their unethical spending or stealing when BPA software makes it easy to cross-reference, double-check, and access data. The software also streamlines audits, management reviews, and document examination, making it even more likely that someone in your company will catch mistakes and fraud before they become a huge problem.
Automated data capture and indexing tools dramatically reduce the risk of errors and ensure that complete, accurate data is available to employees. Using optical character recognition (OCR) technology along with NextProcess’s proprietary indexing technology, we guarantee 99.5% indexing accuracy. In addition to capturing the data in the document, the system also indexes information about every transaction. You’ll be able to run searches and reports by PO and invoice numbers, vendor name, date range, invoice total, payment status, item descriptions, and much more.
Clear, enforceable policies and internal controls are essential for preventing and catching fraud. Flexible software solutions let you customize the software to your company’s needs, making it easy to automatically enforce company policies and regulations. You’ll be able to program all BPA software modules from NextProcess with custom policies, tolerances, and permissions.
The NextProcess Difference
NextProcess offers the only suite of software with modules to power and simplify your capital project management, procurement & purchase orders, accounts payable, travel & expense, and payment disbursements. NextProcess software is designed to integrate seamlessly with your existing ERPs. The modules also integrate seamlessly with each other, providing a true end-to-end solution for business processing.
With end-to-end BPA that you can customize to your company’s unique needs, you’ll have access to tools that can help your company catch errors, fraud, and theft. Automation strengthens internal controls. It allows for easier data monitoring and cross-referencing to prevent and/or catch duplicate payments, fraudulent invoices, illicit response reports, and more. The software also simplifies compliance, because you get to customize the software to automatically enforce company policies related to expense reimbursement, purchasing, invoice approvals, and other financial processes.
In addition, NextProcess’s transactional pricing model and cloud-based configuration make it an economical and practical solution for large corporations. There are no additional licensing fees for additional users, no matter how large your company is. The cloud-based Software-as-a-Service (SaaS) model ensures that all your employees—no matter what their geographic location—will be working with the same software platform. This improves visibility, oversight, and user-friendliness.
You can see first-hand how NextProcess automation software can help your company by contacting us to set up a free demo. We’ll be happy to demonstrate how the software solutions work and how you can customize them to meet your company’s exact needs.