[IMGCAP(1)]A long time ago in a galaxy far, far away… there was more than likely fraud and payment errors in accounts payable processes within the Death Star.
With the imminent launch of the newest Star Wars movie, there’s no better time to look at the lessons made available to us over the years through the teachings of Yoda, C-3PO, Obi-Wan and, yes, even the man in black himself, Darth Vader. So power up the lightsaber, and let’s see what our friends from across the galaxy have to teach us about fraud, duplicate payment detection and recovery audits.
Lesson #1: “It’s a trap!” - Admiral Ackbar
Fraud runs rampant in organizations of any size. Don’t believe it? The ACFE Report to the Nations fraud study has indicated that asset misappropriations are the most common of occupational frauds. And, while their median loss of $130,000 per incident pales by comparison with the median $1 million loss for financial statement fraud, misappropriations represent an insidious fraud category that is difficult to detect without preventative, mitigating controls and ongoing monitoring. In other words, don’t fall into the trap of thinking you know your people and your vendors to such a degree that nothing can go wrong, and that fraud could never happen where you work. Chances are, it’s already there.
Lesson #2: “Fear is the path to the dark side.” – Obi-Wan Kenobi
Accounts payable professionals who let fear stand in the way of putting systems in place to detect duplicate payments and fraudulent losses are pulling their company down instead of raising it up. Engagement in early fraud and payment-error education processes acts as a buffer that could lead to fewer duplicate payments and prevent money from walking out the door. The fear of discovering what’s flawed in your AP department is real, but the education that comes from an audit is often more valuable than the losses that are recovered. So be brave and walk into the dark side of the cave—you have more to gain by facing your fears than by looking the other way.
Lesson #3: “Do or do not. There is no try.” – Yoda
[IMGCAP(2)]Many organizations attempt to handle recovery audits, overpayment detection and risk analysis in-house. What they’re finding is that they’re not getting the results they want. That’s not surprising. The top third-party recovery audit and risk analysis suppliers have access to upward of 100 external government watch lists, as well as global companies’ address data and links to IRS and Small Business Administration databases. They have also done audits in your particular industry and have “insider” knowledge about the most common errors in AP for your type of procurement and invoices. “Cleansing” vendor lists and detecting and preventing duplicate payments are their core competency, which is why outsourcing these services offers the biggest ROI in terms of dollars, time and manpower saved. AP professionals who use third-party vendors free up their company’s workforce, allowing them to put time and effort into their areas of core competency where they can make a difference.
Lesson #4: “Someday I will be the most powerful Jedi ever.” – Anakin Skywalker
What does it take to create the most powerful of AP departments? Having a clean vendor master list is a powerful start. Portals today simplify the vendor onboarding process, ensuring no duplicate vendors (and payments) occur, as well as weeding out high-risk or fraudulent vendors. In addition, the right portal will reduce cost per invoice, strengthen your global compliance and increase supplier satisfaction via dynamic discounting options.
Lesson #5: “The force is strong in this one.” - Darth Vader
Isn’t this what you want your employees and customers saying about you? By putting best practices in place, you’ll have stronger internal employee relations and external supplier relationships. Best practices include continuous monitoring of 100 percent of your data, vendors and employees on a daily, monthly and quarterly basis; knowing your suppliers and invoice/payment patterns; and tackling head-on (typically with the help of third-party specialists) the Sisyphean task of keeping vendor data records clean.
Lesson #6: “Hello, I am C-3PO, human cyborg relations. How might I serve you?” – C-3PO
There’s a sometimes unstated fear that duplicate payment and fraud detection technologies will replace a human workforce. The lesson from our goldenrod friend is that technologies are there to enhance, not replace, the workforce. Businesses are still built on relationships, especially with your key suppliers. Technologies and audits that help AP professionals better do their jobs and service their companies will pay dividends in the long term and can be used to enhance strategic relationships. Even lovable computers like C-3PO and R2-D2 have their place—and their limits. In our industry, people will always come first.
Lesson #7: “You were the chosen one!… You were to bring balance to the force, not leave it in darkness.” – Obi-Wan Kenobi
We all have our secrets. In the AP world, for example, there are the dirty secrets of contract noncompliance and the disconnects in the procure-to-pay process that lead to big gaps in negotiated contracts and actual payment. Just like a Jedi, an AP professional’s task is clear—make sure you are capturing discounts for which you are eligible, identify categories of spend that are potential discount vendors, and leverage dynamic discounting and supply chain financing options to ensure balance in your world—and in your cash flow.
Lesson #8: Luke… I am your father.” - Darth Vader
Never doubt that delivering the right punch of information can dramatically change the course of future events. Your punch should be broadcasting—both internally and externally—your intent to fight fraud and root out the source of errors in payments. While it may be more dramatic to have the “Gotcha!” moment Vader delivered to Luke, far more effective is letting everyone in your company know you have technology, systems and procedures in place to shine a light on the causes of error and fraud, and that you’re not afraid to take action.
Adhere to the above lessons, and it’s only a matter of time before you’re not only fighting fraud, eliminating duplicate payments and saving your company money, but also mastering those Jedi-mind tricks. Now, who’s ready to enjoy that new Star Wars movie?
Joseph Burke is more than just a Star Wars fan, he is APEX Analytix’s senior vice president, global marketing & business development. As part of the company’s leadership team, he works to ensure APEX remains an innovator in software, audit and consulting services that drive measurable value while safeguarding financial resources globally. He can be reached at firstname.lastname@example.org.
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