Quick insight of P2P observations
🔸Duplicate payments due to invoice errors.
🔸Unauthorized people approving or changing payments.
🔸Purchases made without proper approval.
🔸Payments made without checking deliveries.
🔸No clear separation of job roles.
🔸Inconsistent approval levels for orders.
🔸Supplier issues due to unclear agreements.
🔸Invoices and orders are not matched.
🔸Missing or outdated contracts in files.
🔸No competitive bidding or supplier review.
🔸Too much reliance on one supplier.
🔸Lack of visibility and tracking in procurement data.
🔸No proper onboarding or performance tracking for suppliers.
🔸Late payments upset suppliers.
🔸Incomplete purchase requests and poor specifications.
🔸Supplier contracts and prices not reviewed regularly.
🔸Inconsistent pricing and procurement controls.
🔸Slow approval and delayed order processing.
🔸Poor inventory and order status tracking.
🔸Missing delivery notes and receipts.
🔸Errors in manual data entry and records.
🔸Not enough documentation for urgent purchases.
🔸No set lead times or delivery timelines.
🔸Lack of staff training in procurement processes.
🔸Poor communication with suppliers and end-users.
🔸Procurement budgets and payments not tracked properly.
🔸Unused inventory raises costs, holding fees.
🔸Delayed confirmation of received goods.
🔸Unclear or inconsistent procurement policies.
Possible Frauds -
🔸 Business Email Compromise (BEC): Hacking business emails to request unauthorized payments.
🔸 Fake Vendor Payments: Fraudulent invoices sent from impersonated suppliers.
🔸 Fake Purchase Orders: Nonexistent orders with fraudulent purchase orders.
🔸 Vendor Account Takeover: Hacked vendor accounts with altered payment instructions.
🔸 Supplier Phishing: Deceptive tactics to extract payment information from suppliers.
🔸 Collusion with Vendors: Employees working with fake vendors to approve fraudulent payments.
🔸 Invoice Financing Fraud: Bogus financing schemes requiring advance fees.
🔸 Bogus Supplier Onboarding: Setting up fake supplier accounts to collect payments.
🔸 Inflated Invoice Requests: Sending exaggerated invoices and demanding prompt payment.
🔸 Fake Freight Charges: Fraudulent logistics firms claiming shipping fees.
🔸 Utility Payment Threats: Claims of impending disconnection unless payments are made.
🔸 Outsourcing Scams: Fraudulent service offers with requests for fees.
🔸 Social Engineering: Manipulating employees to gain access to sensitive information.
🔸 Check Overpayment Scams: Sending fake checks and requesting refunds.
🔸 Fake Product Returns: Requests for refunds on products that were never purchased.
🔸 Phishing Attempts: General attempts to steal information through deceptive emails.
🔸 Unsolicited Vendor Approaches: Random solicitations from supposed vendors seeking payment.
🔸 Fake Account Change Requests: Requests to change bank account information that are fraudulent.
🔸 Fraudulent Invoicing: Sending invoices for services never rendered.
Order-to-Cash Audit key issues :
🔸 Fake customer orders and inflated revenue through fictitious sales.
🔸 Unauthorized discounts, refunds, and credits issued to fake customers.
🔸 Misappropriated or improperly recorded cash receipts by employees.
🔸 Duplicate invoices and orders manipulating sales data.
🔸 fake customers - unauthorized changes to customer credit limits.
🔸 Delayed posting and misapplication of customer payments.
🔸 Employee collusion with customers for kickbacks or unauthorized rebates.
🔸 Fraudulent reporting of receivables and manipulated shipping dates.
🔸 Altered customer addresses and suspicious payment methods increasing risks.
🔸 Unauthorized product returns, excessive refunds, and false credits processed.
🔸 Internal employee hiding overdue payments and creating false transactions.
🔸 Unauthorized write-offs, adjustments to balances, and waived late fees.
🔸 Theft of physical cash receipts and misappropriation of deposits.
🔸 Forged contracts, falsified customer signatures, and fake complaints for refunds.
🔸 Sales commissions and discounts misused through unauthorized adjustments.
🔸 Collusion on pricing or fraudulent credit risks.
🔸 Missing customer payment records and unapplied cash in suspense accounts.
🔸 Phantom sales, excessive write-offs, and unauthorized reopening of closed accounts.
Latest tech driven Recommendations -
🔸 Automate cash application: Implement AI-powered systems to match payments and reconcile accounts automatically, reducing manual errors and increasing efficiency.
🔸 Implement blockchain for invoicing: Blockchain can provide secure, transparent invoicing processes, ensuring tamper-proof transactions.
🔸 Use real-time data analytics: Leverage analytics tools to monitor customer credit risk and optimize collection efforts, preventing delayed payments or defaults.
🔸 Adopt RPA
🔸 Move to cloud-based ERP systems
🔸 Predictive analytics for payment behavior: Use machine learning to forecast customer payment trends and proactively manage cash flow & receivables.
🔸 Switch to digital payment platforms
🔸 Implement e-invoicing
🔸 Offer dynamic discounting
🔸 Deploy self-service customer portals
🔸 Real-time payment tracking: Use integrated tools for real-time tracking of payments, ensuring quicker detection of issues & improving cash management.
🔸 Regular credit risk assessments: Continuously monitor and update customer credit profiles using automated systems to reduce exposure to bad debts.
🔸 Strengthen fraud detection systems: Use AI-driven tools to flag suspicious activities, such as duplicate orders, unauthorized discounts, and unusual payment patterns.
🔸 Optimize dispute resolution: Digital tools, enabling faster response times
🔸 Digital contracts and e-signatures
Recommendations aim to improve processes, may not apply to all companies. Feel free to add, Difference of opinion possible.
