Procurement fraud can drain your organization’s funds and sabotage your procurement strategy. If criminals are actively exploiting procurement processes and cheating your company out of money, not only can it disrupt your company’s growth plans, but also ruin your company’s reputation.
Whether it’s through ongoing, undetected scams that slowly trickle money away from your company’s bottom line, or quick, devastating strikes, fraud can eat away an organization’s finances and dismantle a procurement team’s plans.
However, procurement professionals can protect their organization and strategies from this damaging fraud. These are the five steps you can take to protect your company from procurement fraud.
How can you protect your company from procurement fraud?
Proactive procurement leaders can help prevent procurement fraud and save their organization from significant losses. Here are five ways to protect your company:
1. Reduce rogue spending.
Any time employees purchase goods or supplies outside your organization’s approved channels or with unapproved suppliers, it exposes your company to procurement fraud. That’s because this type of spending is often shielded from procurement’s view. It may also mean employees are purchasing from suppliers your team hasn’t already vetted and built relationships with.
Procurement can eliminate rogue spending by investing in an eProcurement solution with a centralized digital marketplace. These tools make it easy for employees to browse and purchase with approved suppliers. That way, spend under management increases, procurement can see which suppliers the company interacts with, and you can prevent fraudulent suppliers from stealing from your company.
2. Increase spend visibility.
Procurement leaders can’t stop fraud if they can’t see where the company is spending. Unfortunately, most procurement teams’ spend visibility is clouded because of limited spend data, errors throughout the procure-to-pay (P2P) process, or other problems.
One of the easiest ways to increase spend visibility is to adopt an advanced digital P2P solution. This technology improves spend visibility in two important ways:
- More spend data: Advanced P2P solutions funnel digital spend information into a single system where you can see how employees are spending money, who the company is working with, and any suspicious spending behavior.
- More accurate spend data: Automated P2P solutions also limit human touches throughout the PO management process, cut down input errors, and eliminate common mistakes. That means the spend data your team sees is more accurate and it’s easier to identify fraud red flags.
3. Improve supplier relationships.
Fake company orders or other shady activity will stand out if you actively interact with suppliers and deepen relationships. So the more you improve supplier relationships, the lower your risk of procurement fraud.
One lesser-known way to improve supplier relationships is to automate the P2P process. Technology can complete tasks with little or no human interaction and speed up processes. For instance, some solutions will use machine learning to automate two or three-way matching, identify patterns in your P2P management process, and learn to complete tasks for you. That can dramatically cut down the time spent on task-based work and provide more time to focus on managing supplier relationships.
4. Increase your percentage of digitally enabled suppliers.
When a higher percentage of your suppliers are digitally enabled, your team can see, manage, and monitor spending activity more easily. In turn, fraudulent behavior will stand out.
The best way to expand your company’s percentage of digitally enabled suppliers is to use an advanced P2P solution that gathers supplier information and integrates it into your company’s enterprise resource planning (ERP) or digital payment system.
In addition to eliminating the errors that often cover up fraudulent activity, if your P2P data flows through automated SpendTech™—or spend management technology—machine learning can identify irregularities in spending activity and alert you to potential fraud.
Learn how to use technology to empower your procurement team.
Procurement fraud can ruin procurement’s strategy and damage the entire operation. However, with technology and a few best practices, procurement can stop these schemes before they cut into the company’s bottom line.
Want to learn more ways P2P solutions are reshaping what procurement can accomplish? Download Spend Matters: The Evolution of Corporate Procurement Systems to learn about the latest developments in procurement technology–and how they’re helping procurement teams solve their most urgent problems.
