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9 Spend Duplicates Only AI Can Catch

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9 Spend Duplicates Only AI Can Catch

What prevention methods does your company have in place to prevent duplicate spend? Most modern invoice automation systems can look out for two invoices with the same invoice number, or the same amount, and stop a payment that appears to be a duplicate. But this doesn’t find typos in invoice numbers, duplicates across expense and AP systems, or a number of other scenarios you may not even be considered.

AI can help. When it comes to duplicate spend, AI takes an expansive view, looking across all back-office systems, identifying duplicate spend across multiple payments, and more.

By taking advantage of the structured data in your spend systems as well as the unstructured data in your invoices and receipts, you can identify duplicates with ease.

Below are nine types of duplicates that only AI can catch.

1. Manual keying errors

Invoice processes often rely on manual data entry, which is error-prone. An employee might mistype the letter “O” as the number “0”, or “SEPT” as “SEP.” These types of duplicates are preventable and common, but wouldn’t be caught by a traditional invoice system. AI can find manual entry errors in invoice numbers or dates that typically fly under the radar in invoice automation systems and flag them for review.

2. Different supplier divisions

Your company might do business with multiple supplier divisions. These names may be listed separately in your supplier master list, so if you receive the same invoice from these entities, your AP automation system may not detect it. AI can flag duplicate invoices for the same deliverables sent from a supplier’s headquarters and international divisions.

3. Different company divisions

Similar to the example above, your own company’s internal divisions can create confusion. Each division within your company may have its own AP organization and approvals process, and wouldn’t know if an invoice was already received and paid by a separate department. AI can flag duplicate invoices for the same deliverables that are sent to different divisions.

4. Overlapping or cumulative

A supplier may send several invoices and then a quarter-end cumulative invoice, for example, three separate invoices at different amounts (one for $8,500, one for $4,000, and one for $13,200) and then a quarter-end invoice for $25,700. Traditional invoice systems may not catch this, but AI will flag these invoices for review.

5. Line-level

AP automation systems may not extract line details from an invoice. AI will check for duplicates at the line level and discover that, for example, the same services were included in two separate invoices.

6. Different AP systems

Maybe you have several back-office systems because of company mergers. When duplicate invoices hit different systems, your company may never know it. AI integrates with multiple invoice automation systems and flags duplicates regardless of which system they’re in.

7. Duplicate crossover spend

Your company likely doesn’t have visibility across its invoice automation and expense systems, causing you to pay twice for the same service if it’s submitted via T&E reimbursement and again via accounts payable. AI flags this so payments aren’t sent twice.

8. Duplicate expense claim submitted by two different employees

Maybe this is a mistake, or maybe the employees know that expense reports aren’t cross-referenced (especially if they have two different managers, or are in two different departments). Whatever the reason, AI can cross-reference expense reports from any department and flag when the same receipt is found on two different reports.

9. Duplicate expense claim in the same report

After a long business trip, all the receipts may begin to look the same, and an employee might accidentally submit the same expense twice in the same expense report. AI looks at individual line items and flags any duplicates.

How AI can help

Duplicates can take many different forms and can be difficult to find in a manual review process. To gain visibility into their business spend, many companies have embraced AI to achieve 100% visibility into expenses and invoices. Companies that automate their audit process are able to find errors, fraud, and non-compliant spend before payment.

To learn more about how 100% visibility into business spend means to you and gain additional insights on auditing business spend with AI, download our latest research report, The State of Business Spend. The findings focus on the impact of auditing with AI, the risk hiding in expenses and invoices, risky spend, and more.

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Josephine McCann is a Senior Marketing Associate at AppZen, the world’s leading solution for automated expense report audits that leverages artificial intelligence to audit 100% of expense reports, invoices and contacts in seconds.

4 Limitations of the Three-Way Match You Need to Consider

The three-way match, which cross-references invoices, purchase orders, and receiving documents before issuing payments, has been considered the industry-standard procedure in accounts payable departments for years—until now. As businesses become more sophisticated, there are far more data points to confirm the validity of an invoice. Does it include all early payment discounts? Are the payment terms (net 30, net 60) enforced? Unfortunately, many accounts payable departments don’t have the time or resources to manually check these items, and are unknowingly being overcharged for services that they didn’t receive, or products that aren’t for the negotiated rates or terms.

Below are four reasons the three-match is no longer enough to prevent overpayment or fraud.

1. The three-way match can’t check multiple data points

Again, the three-way match only verifies price and unit numbers across invoices, purchase orders, and receiving documents, but it doesn’t check critical information like volume discounts, payment terms, delivery times, transport conditions, chain of custody, service-level agreements, and more. These data can affect your bottom line: longer payment terms help you improve cash flow and maximize profits.

2. The three-way match doesn’t confirm that services were actually performed

Because of its limited sources of data, the three-way match doesn’t integrate with business systems to verify key fob swipes, messages sent, or software licenses. This data is important for creating a profile of contractor and service provider activity levels so you can make sure you’re actually receiving the work you’re paying for.

3. The three-way match still leaves you open to fraud

And outright fraud is a big problem. Aware of the sheer volume of invoices many business receive, clever criminals can thwart the three-way match by creating fictitious companies, enacting phishing scams, billing for products that were never delivered, overcharging for products, or inflating shipping charges. The three-way match won’t catch fake merchants, billing errors, or violations of payment terms.

4. The three-way match doesn’t check employee expense reports

Even if the three-way match works fine for your purchasing department, it won’t catch employee expense reports, which are processed through their own system, completely separate from AP. The average enterprise deals with thousands of expense reports each quarter, often overwhelming human auditors who may miss high-risk expenses and common misconduct like duplicate charges and mileage padding. The three-way match offers no visibility into questionable employee spending.

Address the shortcomings of the three-way match with artificial intelligence  

The good news is that there is a solution for the limitations of the three-way match: Star Match, which uses artificial intelligence to cross-check the accuracy of documents and transactions—including expenses, invoices, —against AP systems, contract management, and expense reporting software; internal business systems data; and external signals from online sources.

To help ensure that you’re receiving the products and services you paid for, Star Match cross-references business data from email, messaging, badge access, sensor data, and system logs, as well as external online data to verify work activity, software license usage, shipping documents, and more. We match these data points to your contracts, invoices and any other documents to verify everything is correct. Because AppZen integrates with your expense automation system, Star Match matches across expense reports as well—the only solution to do so—helping you spot errors, waste, and fraud.

With AppZen and our AI platform powered by Star Match, you can enforce contract terms every time you receive an invoice, helping you better manage contracts and control spending.

Josephine McCann is a Senior Marketing Associate at AppZen, the world’s leading solution for automated expense report audits that leverages artificial intelligence to audit 100% of expense reports, invoices and contacts in seconds.

3 Common Invoicing Scams and How to Avoid Them

Invoicing and payments fraud can take a variety of forms: invoices from fictitious companies, invoices for products that were never delivered, for unusually high amounts, or as part of a phishing scheme. As your business grows and your vendor list gets larger, how do you stay on top of the validity of each invoice? Below are some common invoice fraud schemes and how you can prevent them.

CEO Impersonation

Imagine you’re an accountant and you receive an email from your CEO with a request for an urgent payment. He or she is finalizing the acquisition of another company and need you to wire money immediately in order to close the deal. You receive a follow-up phone call from a third party with the wiring instructions and authorize the payment as instructed. Only later do you find out that the email wasn’t really from the CEO and both the email and the phone call were an orchestrated scam.

This type of fraud, known as “business email compromise,” “CEO fraud,” or “CEO impersonation” was responsible for over $675 million in losses last year alone, according to the 2017 FBI Internet Crime Report. Using a spoofed email address (a common method for phishing schemes), fraudsters specifically target individuals responsible for wire transfers or invoices within an organization and solicit payments from them. They thoroughly research a company’s recent activity and target companies that conduct a lot of foreign transactions via wire transfer, since those payments are difficult to reverse. The authority of the sender, the urgency of the request, and the spoofed email address create a very convincing hoax.

                              Vendor Impersonation

Fraudsters may impersonate trusted vendors as well. Using a spoofed email, they may send notice that they’ve recently changed addresses or ACH routing information along with a fake invoice. Similar to CEO impersonation, this type of fraud happens when someone impersonates a vendor you already conduct business with. Fraudsters specifically target an employee within accounts payable, hoping that the payment will go through long before anyone questions its validity.

Awareness is key to prevent CEO and vendor impersonation fraud from happening in your organization. If you receive an email that seems suspicious, pay attention to the tone of the email: Does it sound like something your CEO would send to you? Is it their usual tone, or is it overly formal? Another thing to consider: Is it unusual for you to receive a wire transfer or urgent payment request from your CEO or this particular vendor? If you’re unsure, just ask, especially for large amounts.

Shell Companies

The creation of a shell company is one of the easiest ways for an employee to perpetrate an invoicing fraud scheme. A shell company only exists on paper, provides no services, and produces nothing. This type of fraud is often an inside job; the employee might set up the entity in a friend’s or relative’s name and invoice their employer and collect the payments. Typically, the employee will have information on the way the invoices are processed (or may even be the one paying them), so they know exactly what threshold to stay under to avoid further approvals, potentially remaining undetected for years.

Shell companies can be difficult to distinguish from real companies, but there are a few red flags. Be wary of invoices that have vague or unspecified services – this doesn’t necessarily indicate fraud, but services never rendered are a lot harder to detect than products never delivered. Are the invoices you receive numbered in sequential order? This may be because they have no other customers, and you’re the only one receiving the invoices. If you suspect it’s a fake invoice from a shell company, keep an eye out for other red flags (typos, grammatical errors). If it’s from a vendor you don’t recognize, then be cautious. Look closely at the address, tax ID number, and phone numbers – one of these might match one of your employees.

 

Josephine McCann is a Senior Marketing Associate at AppZen,the world’s leading solution for automated expense report audits that leverages artificial intelligence to audit 100% of expense reports, invoices and contacts in seconds.