{"id":29459,"date":"2025-04-09T09:00:00","date_gmt":"2025-04-09T13:00:00","guid":{"rendered":"https:\/\/www.sage.com\/en-us\/blog\/?p=29459"},"modified":"2025-07-17T14:09:57","modified_gmt":"2025-07-17T18:09:57","slug":"accounts-payable-fraud-guide","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-us\/blog\/accounts-payable-fraud-guide\/","title":{"rendered":"Accounts payable fraud: What is it and how to prevent it"},"content":{"rendered":"<header class=\"entry-header has-dark-background-color entry-header--has-illustration entry-header--has-illustration--generic\">\n\t<div class=\"container\">\n\t\t<div class=\"entry-header__row row align-center\">\n\t\t\t<div class=\"col col-lg-7 col-xlg-6 entry-header__content\">\n\t\t\t\t\t\t\t<div class=\"component component-single-header\">\n\t\t\t\t\t\t\t\t\t\t<div class=\"entry-header__misc text--subtitle text--uppercase text--small\">\n\t\t\t\t\t\t\t<a href=\"https:\/\/www.sage.com\/en-us\/blog\/category\/money-matters\/\" class=\"entry-header__link\">Money Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t<div class=\"entry-title-wrapper\">\n\t\t\t\t\t<h1 class=\"entry-title\">\n\t\t\t\t\t\tAccounts payable fraud: What is it and how to prevent it\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t<p class=\"entry-header__description\">\n\t\t\t\t\t\t\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t<div class=\"single-post-details container\">\n\t\t<div class=\"col\">\n\t\t\t<span class=\"posted-on \"><time class=\"entry-date published\" datetime=\"2025-04-09T09:00:00-04:00\">April 9, 2025<\/time><\/span><span class=\"reading-time\"> min read<\/span>\n\t\t<button\n\t\t\ttype=\"button\"\n\t\t\tclass=\"social-share-button button button--icon button--secondary js-social-share-button\"\n\t\t\tdata-share-title=\"Accounts payable fraud: What is it and how to prevent it\"\n\t\t\tdata-share-url=\"https:\/\/www.sage.com\/en-us\/blog\/accounts-payable-fraud-guide\/\"\n\t\t\tdata-share-text=\"Please read this interesting article\"\n\t\t>\n\t\t\t<span class=\"social-share-button__share-label\">Share<\/span>\n\t\t\t<span class=\"social-share-button__copy-label\" hidden>Copy Link<\/span>\n\t\t\t<span class=\"social-share-button__copy-tooltip\" aria-hidden=\"true\" hidden>Copied<\/span>\n\t\t<\/button>\n\n\t\t\t\t<\/div>\n\t<\/div>\n<\/header>\n\n\n\n<div class=\"wp-block-post-author\">\n\t\t\t<div class=\"co-authors\">\n\t\t\t\n\t\t<div class=\"entry-author-wrapper\">\n\t\t\t<a class=\"entry-author\" href=\"https:\/\/www.sage.com\/en-us\/blog\/author\/staceymcintosh\/\">\n\t\t\t\t<img decoding=\"async\" alt=\"\" src=\"https:\/\/www.sage.com\/en-gb\/blog\/wp-content\/uploads\/sites\/10\/2018\/11\/Stacey-McIntosh-350-1.jpg\" class=\"entry-author__image\" height=\"40\" width=\"40\" fetchpriority=\"high\" \/>\t\t\t\t<span class=\"entry-author__name\">Stacey McIntosh<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t<\/div>\n\t\t<\/div>\n\n\n\n\n\n<p>Accounts payable (AP) fraud is an issue that any business should take seriously. It can have a big impact on your company&#8217;s financial health, operational efficiency, and overall reputation.<\/p>\n\n\n\n<p>In fact, AP fraud can cost businesses millions of dollars. Not to mention the damage it can do to the trust and relationships you&#8217;ve built with vendors and customers.<\/p>\n\n\n\n<p>Unfortunately, AP fraud is becoming an increasingly common threat for businesses of all sizes. According to the <a href=\"https:\/\/www.afponline.org\/training-resources\/resources\/survey-research-economic-data\/details\/payments-fraud\" target=\"_blank\" rel=\"noreferrer noopener\">2024 AFP Payments Fraud and Control Survey Report<\/a>, 80% of organizations said they were victims of payments fraud attacks or attempts in 2023.<\/p>\n\n\n\n<p>That\u2019s a 15 percentage point increase compared to the previous year.<\/p>\n\n\n\n<p>This article will explain what accounts payable fraud is, common fraud schemes, how to detect it, and how to prevent it.<\/p>\n\n\n\n<p>Additionally, you\u2019ll be able to read about some practical steps you can take to protect your company from the risk of AP fraud.<\/p>\n\n\n\n<p>Here\u2019s what we cover:<\/p>\n\n\n<?xml encoding=\"utf-8\" ?><div class=\"wp-block-yoast-seo-table-of-contents yoast-table-of-contents\"><ul><li><a href=\"#h-what-is-accounts-payable-fraud\" data-level=\"2\">What is accounts payable fraud?<\/a><ul><li><a href=\"#h-why-does-accounts-payable-fraud-happen\" data-level=\"3\">Why does accounts payable fraud happen?<\/a><\/li><\/ul><\/li><li><a href=\"#h-common-accounts-payable-fraud-schemes\" data-level=\"2\">Common accounts payable fraud schemes<\/a><ul><li><a href=\"#h-invoice-fraud-duplicate-invoices-overcharging-and-fictitious-vendors\" data-level=\"3\">Invoice fraud: Duplicate invoices, overcharging, and fictitious vendors<\/a><\/li><li><a href=\"#h-payment-fraud-unauthorized-payments-altered-checks-and-account-manipulation\" data-level=\"3\">Payment fraud: Unauthorized payments, altered checks, and account manipulation<\/a><\/li><li><a href=\"#h-employee-fraud-insider-threats-and-collusion\" data-level=\"3\">Employee fraud: Insider threats and collusion<\/a><\/li><li><a href=\"#h-other-accounts-payable-fraud-schemes\" data-level=\"3\">Other accounts payable fraud schemes<\/a><\/li><\/ul><\/li><li><a href=\"#h-how-to-detect-accounts-payable-fraud\" data-level=\"2\">How to detect accounts payable fraud<\/a><ul><li><a href=\"#h-atypical-or-missing-invoice-details\" data-level=\"3\">Atypical or missing invoice details<\/a><\/li><li><a href=\"#h-inconsistent-vendor-information\" data-level=\"3\">Inconsistent vendor information<\/a><\/li><li><a href=\"#h-suspicious-vendor-activity\" data-level=\"3\">Suspicious vendor activity<\/a><\/li><li><a href=\"#h-duplicate-payments\" data-level=\"3\">Duplicate payments<\/a><\/li><li><a href=\"#h-unusual-payment-patterns\" data-level=\"3\">Unusual payment patterns<\/a><\/li><li><a href=\"#h-missing-or-altered-documentation\" data-level=\"3\">Missing or altered documentation<\/a><\/li><li><a href=\"#h-vendor-complaints-and-staff-behavior\" data-level=\"3\">Vendor complaints and staff behavior<\/a><\/li><li><a href=\"#h-accounts-payable-fraud-detection\" data-level=\"3\">Accounts payable fraud detection<\/a><\/li><\/ul><\/li><li><a href=\"#h-how-to-prevent-accounts-payable-fraud\" data-level=\"2\">How to prevent accounts payable fraud<\/a><ul><li><a href=\"#h-strengthen-internal-knowledge-and-controls\" data-level=\"3\">Strengthen internal knowledge and controls<\/a><\/li><li><a href=\"#h-implement-a-vendor-verification-process\" data-level=\"3\">Implement a vendor verification process<\/a><\/li><li><a href=\"#h-leverage-ap-automation-software\" data-level=\"3\">Leverage AP automation software<\/a><\/li><\/ul><\/li><li><a href=\"#h-accounts-payable-fraud-case-examples\" data-level=\"2\">Accounts payable fraud case examples<\/a><\/li><li><a href=\"#h-final-thoughts\" data-level=\"2\">Final thoughts<\/a><\/li><\/ul><\/div>\n\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Business flows with Sage<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p><!-- wp:paragraph --><\/p>\n<p class=\"\">Explore the latest best-in-class add-on technology from Sage with our new webinar series. Discover seamless ways to automate processes, business insights to support growth at scale, and strategies to help you build a winning partnership with your leadership team.&nbsp;<\/p>\n<p><!-- \/wp:paragraph --><\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"https:\/\/www.sage.com\/en-us\/sage-customer-webinars\/\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\tid=\"cta-id-20454\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\tdata-button-location=\"cta_box\"\n\t\t\t\t\t\t\t\t\t\t\t>Register for webinars<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1215\" height=\"810\" src=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2023\/09\/GettyImages-1421970566-1215x810.jpg\" class=\"single-cta__image\" alt=\"\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2023\/09\/GettyImages-1421970566-1215x810.jpg 1215w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-accounts-payable-fraud\">What is accounts payable fraud?<\/h2>\n\n\n\n<p>Accounts payable fraud refers to any dishonest activity or scheme that involves manipulating your company\u2019s accounts payable system.<\/p>\n\n\n\n<p>These schemes generally revolve around two main components:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The nature of the vendor involved (which could be a fake vendor or a legitimate one)<\/li>\n\n\n\n<li>The fraudulent actions carried out.<\/li>\n<\/ul>\n\n\n\n<p>The fraudulent activities themselves can take many forms, including:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Submitting false invoices<\/li>\n\n\n\n<li>Altering payments<\/li>\n\n\n\n<li>Masking unauthorized purchases<\/li>\n\n\n\n<li>Colluding with employees to steal money from a company.<\/li>\n<\/ul>\n\n\n\n<p>Each of these actions allows the fraudster to manipulate the AP process and steal funds from the company.<\/p>\n\n\n\n<p>In many cases, fraudsters target weaknesses in internal controls, processes, or manual checks, making it easier for them to divert funds without detection.<\/p>\n\n\n\n<p>Whether it\u2019s exploitation of simple human error or deliberate manipulation, AP fraud is often difficult to identify until it\u2019s too late.<\/p>\n\n\n\n<p>As such, it poses a particular risk to small and medium-sized businesses that may not have robust enough fraud prevention systems in place.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-why-does-accounts-payable-fraud-happen\">Why does accounts payable fraud happen?<\/h3>\n\n\n\n<p>AP fraud can happen for a variety of reasons, but it usually boils down to a lack of internal controls or opportunities for manipulation within the AP process.<\/p>\n\n\n\n<p>Sometimes, fraud is carried out by outsiders, such as vendors who intentionally submit fake or inflated invoices.<\/p>\n\n\n\n<p>Other times, it&#8217;s an inside job, with employees using their position to approve unauthorized payments or create fictitious vendors.<\/p>\n\n\n\n<p>The key to preventing fraud is catching it early, which requires proactive systems, checks, and regular audits.<\/p>\n\n\n\n<p>The financial and operational consequences of AP fraud can be devastating, so it\u2019s important that you put systems in place to enable early detection and prevention.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-common-accounts-payable-fraud-schemes\">Common accounts payable fraud schemes<\/h2>\n\n\n\n<p>Understanding how different types of AP fraud work will help you recognize and address potential risks to your business.<\/p>\n\n\n\n<p>Here are some of the most common accounts payable fraud schemes:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-invoice-fraud-duplicate-invoices-overcharging-and-fictitious-vendors\">Invoice fraud: Duplicate invoices, overcharging, and fictitious vendors<\/h3>\n\n\n\n<p>One of the most common types of AP fraud is invoice fraud. This happens when a vendor or employee submits fake invoices or duplicates legitimate invoices to receive payments for goods or services that were never delivered.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Duplicate invoices:<\/strong> the same invoice is submitted more than once for payment. Sometimes it might be under a different name or with a slight modification. The invoice may look legitimate at first glance, but the extra payment goes into the fraudster\u2019s pocket.<\/li>\n\n\n\n<li><strong>Overcharging:<\/strong> fraudsters may alter the amounts on legitimate invoices, overcharging for goods or services. In some cases, this can be difficult to spot unless you thoroughly review the details of each invoice.<\/li>\n\n\n\n<li><strong>Fictitious vendors:<\/strong> a more sophisticated form of invoice fraud involves creating fictitious vendors. In this scenario, an employee or vendor may set up a fake company and submit invoices for products or services that don\u2019t exist.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-payment-fraud-unauthorized-payments-altered-checks-and-account-manipulation\">Payment fraud: Unauthorized payments, altered checks, and account manipulation<\/h3>\n\n\n\n<p>Payment fraud can take several forms, including:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Unauthorized payments:<\/strong> this happens when someone inside your organization authorizes payments for goods or services that were never delivered. Or they might authorize fake payments to their own personal account.<\/li>\n\n\n\n<li><strong>Altered or forged checks:<\/strong> in some cases, checks are forged or altered after they have been issued. This could mean forging a colleague\u2019s signature, changing the payee\u2019s name, or increasing the amount on the check to divert the funds to the fraudster.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-employee-fraud-insider-threats-and-collusion\">Employee fraud: Insider threats and collusion<\/h3>\n\n\n\n<p>Employee fraud is another major risk to be aware of. Any of your team members who have access to sensitive financial data could in theory take advantage of this to commit fraud.<\/p>\n\n\n\n<p>It can be challenging to detect without careful oversight, so it often goes unnoticed for long periods.<\/p>\n\n\n\n<p>Collusion is an example of employee fraud. It\u2019s when two or more of your team members work together to defraud your company.<\/p>\n\n\n\n<p>For instance, one employee might create a fake vendor in the system while another approves the payment.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-other-accounts-payable-fraud-schemes\">Other accounts payable fraud schemes<\/h3>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-pass-through-schemes\">Pass-through schemes<\/h4>\n\n\n\n<p>An employee responsible for approving invoices and authorizing payments creates a shell company to order items your business legitimately gets from other suppliers.<\/p>\n\n\n\n<p>The shell company marks up these items and sells them to your business, allowing the employee to pocket the profit.<\/p>\n\n\n\n<p>These schemes often involve systematic markups and can be quite complex, with numerous variations in how they are carried out.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-ach-fraud\"><strong>ACH fraud<\/strong><\/h4>\n\n\n\n<p>This is when someone unlawfully gains access to your company&#8217;s bank account to make unauthorized electronic payments or transfers through the ACH (Automated Clearing House) network.<\/p>\n\n\n\n<p>The ACH network is commonly used for direct deposits, bill payments, and money transfers.<\/p>\n\n\n\n<p>The fraudster might steal account details or manipulate transactions to divert funds. This can be done through phishing, hacking, or using stolen information to create unauthorized payments.<\/p>\n\n\n\n<p>Once the funds are transferred, they can be hard to trace and recover, making it a significant financial risk for businesses.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-kickback-schemes\"><strong>Kickback schemes<\/strong><\/h4>\n\n\n\n<p>A type of billing or invoice fraud where a company employee works with a suppliers to overcharge your business.<\/p>\n\n\n\n<p>For instance, they may inflate an invoice with the understanding that the employee gets a kickback (a bribe or commission) from the vendor in exchange for approving and processing the invoice.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-expenses-and-reimbursement-fraud\"><strong>Expenses and reimbursement fraud<\/strong><\/h4>\n\n\n\n<p>When employees submit false or inflated expenses for reimbursement. They might claim personal expenses as business-related or exaggerate the cost of legitimate business expenses.<\/p>\n\n\n\n<p>For example, an employee might submit a receipt for a taxi ride that wasn\u2019t for business purposes. Or two colleagues on a trip together could both claim for the total cost of the same joint meal.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-to-detect-accounts-payable-fraud\">How to detect accounts payable fraud<\/h2>\n\n\n\n<p>Recognizing accounts payable fraud early can save your business a lot of money and hassle.<\/p>\n\n\n\n<p>In this section, you\u2019ll find a list of common red flags to look out for and some accounts payable fraud detection strategies to be aware of.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-atypical-or-missing-invoice-details\">Atypical or missing invoice details<\/h3>\n\n\n\n<p>This could be invoices missing important information, such as the tax ID or purchase order number.<\/p>\n\n\n\n<p>Also look out for information that seems wrong, such as invoices that only list a PO Box number in the contact details section.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-inconsistent-vendor-information\">Inconsistent vendor information<\/h3>\n\n\n\n<p>If you notice any discrepancies in your vendor records\u2014such as inconsistent business addresses, tax ID numbers, or contact details\u2014this could be a red flag.<\/p>\n\n\n\n<p>Fraudsters often try to avoid detection by using fake or altered supplier details.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-suspicious-vendor-activity\">Suspicious vendor activity<\/h3>\n\n\n\n<p>Regularly review your vendor database for signs of suspicious activity.<\/p>\n\n\n\n<p>This could include numerous inactive or duplicate suppliers listed in your files. Or invoice information that doesn\u2019t align with the vendor details in your database.<\/p>\n\n\n\n<p>Also, pay close attention to any suppliers consistently awarded contracts, as well as new vendors\u2014particularly if they\u2019ve won a big, unexpected contract.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-duplicate-payments\">Duplicate payments<\/h3>\n\n\n\n<p>It\u2019s easy for duplicate payments to slip through the cracks, especially if invoices are processed manually.<\/p>\n\n\n\n<p>If you notice multiple payments for the same invoice or the same amount, it\u2019s worth investigating further.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-unusual-payment-patterns\">Unusual payment patterns<\/h3>\n\n\n\n<p>Be on the lookout for payment patterns that seem unusual or inconsistent.<\/p>\n\n\n\n<p>For example, are there sudden spikes in payments to particular vendors or irregular payments that don\u2019t align with normal business operations?<\/p>\n\n\n\n<p>These could be signs of fraudulent activity.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-missing-or-altered-documentation\">Missing or altered documentation<\/h3>\n\n\n\n<p>If invoices, receipts, or other supporting documentation seem to be missing or look like they might have been altered, this is another potential indicator of fraud.<\/p>\n\n\n\n<p>Fraudsters often manipulate or destroy documents to cover their tracks.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-vendor-complaints-and-staff-behavior\">Vendor complaints and staff behavior<\/h3>\n\n\n\n<p>If a supplier tells you they never received payment or complains of frequent late payments, look into it straightaway. Especially if your records tells you the payment was made.<\/p>\n\n\n\n<p>Keep an eye out for any unusual or suspicious employee behavior.<\/p>\n\n\n\n<p>For instance, team members who live beyond their means or are reluctant to share duties with colleagues could indicate issues.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-accounts-payable-fraud-detection\">Accounts payable fraud detection<\/h3>\n\n\n\n<p>To boost your chances of staying ahead of fraudsters, consider implementing the following accounts payable fraud detection strategies:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Regular audits and reconciliations:<\/strong> conduct regular audits and <a href=\"https:\/\/www.sage.com\/en-us\/blog\/what-is-account-reconciliation\/\" target=\"_blank\" rel=\"noreferrer noopener\">reconcile your accounts<\/a> to identify any discrepancies early.<\/li>\n\n\n\n<li><strong>Use of data analytics and AP automation tools:<\/strong> automated systems that can help spot patterns of fraud or unusual activity.<\/li>\n<\/ul>\n\n\n\n<p><strong>Segregation of duties:<\/strong> make sure that no one person is in charge of the entire accounts payable process. Separate duties between employees who initiate purchases, approve payments, and reconcile accounts.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-to-prevent-accounts-payable-fraud\">How to prevent accounts payable fraud<\/h2>\n\n\n\n<p>Putting accounts payable fraud prevention measures in place is the best way to minimize the risk posed by fraudsters.<\/p>\n\n\n\n<p>There are various actions and strategies you can consider. Implementing one or more of these best practices will help you protect your business from AP fraud threats:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-strengthen-internal-knowledge-and-controls\">Strengthen internal knowledge and controls<\/h3>\n\n\n\n<p>The foundation of preventing AP fraud is strong internal controls and frequent checks.<\/p>\n\n\n\n<p>These can include: &nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Policies for verifying vendor information<\/li>\n\n\n\n<li>Educating employees on fraud and its warning signs<\/li>\n\n\n\n<li>Setting up checks and balances for approving payments<\/li>\n\n\n\n<li>Ensuring that all invoices are properly reviewed before payment<\/li>\n\n\n\n<li>Multi-level payment approvals for payments over a certain threshold<\/li>\n\n\n\n<li>Regular reviews of transactions, random audits, and creating electronic audit trails.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-implement-a-vendor-verification-process\">Implement a vendor verification process<\/h3>\n\n\n\n<p>Before accepting new vendors, make sure you have a thorough verification process in place, including:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Checking the vendor\u2019s tax identification number<\/li>\n\n\n\n<li>Contacting them directly to confirm their identity<\/li>\n\n\n\n<li>Verifying their physical address.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-leverage-ap-automation-software\">Leverage AP automation software<\/h3>\n\n\n\n<p>Using AP automation software can significantly reduce the risk of fraud.<\/p>\n\n\n\n<p>These tools can help:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Automate invoice processing and approvals, tracking every movement of an invoice<\/li>\n\n\n\n<li>Flag suspicious invoices, anomalies, and errors in real time<\/li>\n\n\n\n<li>Create audit trails and compliant records for all of your transactions.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-accounts-payable-fraud-case-examples\">Accounts payable fraud case examples<\/h2>\n\n\n\n<p>To better illustrate the potential consequences of AP fraud, here are some examples:&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Manufacturer defrauded<\/h3>\n\n\n\n<p>A manufacturer lost millions of dollars to an employee who manipulated accounts payable records for years. They were able to divert funds by authorizing wire transfers from the company\u2019s bank accounts.&nbsp;&nbsp;<\/p>\n\n\n\n<p>They used these stolen funds to pay their personal credit card bills and make various personal purchases from luxury retailers.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">AP clerk sentenced for fraud&nbsp;<\/h3>\n\n\n\n<p>A former accounts payable clerk was sentenced to prison for diverting funds from their employer through fraudulent payments. They defrauded the company of hundreds of thousands of dollars by transferring funds from the business\u2019s bank account.&nbsp;&nbsp;<\/p>\n\n\n\n<p>These funds were sent to their own personal bank accounts, to creditors for personal bills, and to the bank account of another individual.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Embezzlement following signature fraud&nbsp;<\/h3>\n\n\n\n<p>An office manager embezzled nearly $200,000 from the business they worked at. They issued more than 100 fraudulent checks to themselves, forging the signature of the business\u2019s owner. They attempted to hide their fraud by disguising the checks as payroll and loans.&nbsp;&nbsp;<\/p>\n\n\n\n<p>The fraudster also used a co-worker&#8217;s personal information to apply for and fraudulently obtain a credit card, which they maxed out. &nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-final-thoughts\">Final thoughts<\/h2>\n\n\n\n<p>Accounts payable fraud is a crime that can seriously damage your business. It can be costly and hard to detect, with new schemes and tactics emerging all the time.&nbsp; &nbsp;<\/p>\n\n\n\n<p>However, the right systems and strategies can help protect your business from becoming another AP fraud victim.<\/p>\n\n\n\n<p>By implementing strong internal controls, using data analytics and automation, and educating your team about potential risks, you can reduce the likelihood of fraud in your AP department.<\/p>\n\n\n\n<p>Investing in intuitive <a href=\"https:\/\/www.sage.com\/en-us\/accounting-software\/accounts-payable\/\" target=\"_blank\" rel=\"noreferrer noopener\">accounts payable software<\/a> is a good first step. It can help detect fraud in real time, flagging suspicious activity and preventing unauthorized payments.<\/p>\n\n\n\n<p>Features such as automated invoice processing, fraud detection alerts, and secure payment processing, can help safeguard your business against accounts payable fraud.<\/p>\n\n\n\n<p>It\u2019s time to take action. Review your AP processes, train your teams, and introduce fraud-proofing measures that will help give you peace of mind and keep your business vigilant.<\/p>\n\n\n<div class=\"single-cta\">\n\t<div class=\"single-cta__positioner\">\n\t\t<div class=\"single-cta__wrapper has-dark-background-color\">\n\t\t\t<div class=\"single-cta__content\">\n\t\t\t\t\t\t\t\t<h2 class=\"single-cta__title h3\">Subscribe to our Sage Advice Newsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t<div class=\"single-cta__description\">\n\t\t\t\t\t\t<p>Get our latest business advice delivered directly to your inbox.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t<a\n\t\t\t\t\t\thref=\"#gate-ab515c6e-7e90-4c2f-a67e-113872516e8b\"\n\t\t\t\t\t\tclass=\"single-cta__button button button--primary\"\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t>Subscribe<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<img decoding=\"async\" width=\"1440\" height=\"810\" src=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/04\/GettyImages-1073797282-1440x810.jpg\" class=\"single-cta__image\" alt=\"Working from home with tea in hand\" loading=\"lazy\" srcset=\"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2022\/04\/GettyImages-1073797282-1440x810.jpg 1440w\" sizes=\"auto, (min-width: 48em) 33vw, 100vw\" \/>\t\t\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Learn all about accounts payable fraud, how to spot common schemes, and how to minimize the risk and protect your business with our in-depth guide. <\/p>\n","protected":false},"author":346,"featured_media":20188,"menu_order":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sage_video":false,"post_featured_image_hide":false,"footnotes":""},"categories":[158,43,44,49],"tags":[110,334,116,486],"business_type":[40,41],"lilypad":[],"context":[],"industry":[],"persona":[98,96,97],"imagine_tag":[209,233,480,230],"coauthors":[587],"class_list":["post-29459","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-accountants","category-money-matters","category-strategy-legal-operations","category-trends-insights","tag-accounting-101","tag-automation","tag-compliance","tag-security-fraud","business_type-small-business","business_type-growing-business"],"sage_meta":{"region":"en-us","author_name":"Stacey McIntosh","featured_image":"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2023\/09\/GettyImages-1340724966.jpg","imagine_tags":{"209":"Accounting","233":"Medium Businesses","480":"Security Fraud","230":"Small business"}},"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice US","distributor_original_site_url":"https:\/\/www.sage.com\/en-us\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts\/29459","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/users\/346"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/comments?post=29459"}],"version-history":[{"count":0,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts\/29459\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/media\/20188"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/media?parent=29459"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/categories?post=29459"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/tags?post=29459"},{"taxonomy":"business_type","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/business_type?post=29459"},{"taxonomy":"lilypad","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/lilypad?post=29459"},{"taxonomy":"context","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/context?post=29459"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/industry?post=29459"},{"taxonomy":"persona","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/persona?post=29459"},{"taxonomy":"imagine_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/imagine_tag?post=29459"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/coauthors?post=29459"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}