7 Steps to Prevent Procurement Fraud

Fighting Procurement Fraud

Fight Back on Fraud

Procurement fraud is a major issue, affecting 1 in 3 businesses in 2016. According to PwC, procurement fraud is the second most commonly-reported type of economic crime.

Protecting yourself and your organization is not difficult. By taking precautionary steps before fraud is ever an issue, you can save yourself the cost of procurement fraud.

Supply Chain Digital recently published 7 easy ways to prevent procurement fraud that we will revisit here.

Quality Assessment

Ongoing checks for quality will help find dips or inconsistencies that are indicators of contracts being wrongly awarded to under-qualified suppliers.

Question Price Increases

Naturally, prices may fluctuate with selling cycles, but buyers and suppliers should be accountable for price increases. If price changes are routinely ignored, there is room for procurement fraud to sneak in.

Examine Long-Term Supplier Relationships

All suppliers should be regularly reviewed. Long-term suppliers that do not maintain the quality of other suppliers may be the result of poorly managed supplier relationships.

Open Supplier Communication with Multiple Individuals

If only one person is communicating with suppliers, the lack of visibility opens the door to potential fraud. With an open system of communicating, buyers can keep each other in check and weed out any seeds of fraud.

Take Concerns Seriously

Do not ignore feedback. Leaders may not have the same insight that buyers or other users have. If anyone feels uncomfortable with a supplier relationship, investigate the issue appropriately.

Spend Management and E-Procurement Technology

Spend management technology allows you to track all transactions, so you can rest assured that your visibility into spend will keep you notified of any red flags. E-invoicing is a particularly good example of how e-procurement helps fight fraud. Three way checks between purchase orders, goods receipts, and invoices help find fraud before you ever pay on a fraudulent charge.

Education & Awareness

Too many people are unaware of the risks associated with procurement fraud. By equipping our procurement teams with the understanding of how to spot red flags and what to do when something is wrong, we can protect our organizations.

These 7 ways to prevent fraud could save you from costly, fraudulent relationships and errors. Start implementing these today to protect your organization.

To learn more about how spend technology can protect you from fraud, register for a live demo from Vroozi today.

Source: Supply Chain Digital, Time to call time on procurement fraud