Accounts Payable Tracker® Series Report

Winning the Fraud Fight: How AP Automation Can Deflect Rising Security Threats

October 2024

Fraudsters are increasingly targeting businesses, and outdated payment systems are adding fuel to the attacks. Discover how modern AP automation solutions can help safeguard accounts payable departments from rising threats.

PYMNTS
01

AP departments are facing rising cyberfraud risks, with more than eight in 10 U.S. companies targeted by sophisticated digital payment fraud tactics. Integrating real-time monitoring and intelligent fraud prevention systems can address these new security challenges, underscoring the need for stronger fraud prevention measures.

02

While increasing digitization has expanded the presence of cyberthreats, manual processes and payments can be even more vulnerable to attacks. Adopting digital, automated solutions that incorporate fraud detection at every step addresses this vulnerability and helps reduce exposure to B2B payment fraud.

03

The current risk scenario calls for greater reliance on secure, end-to-end payment platforms with built-in fraud prevention measures. Real-time monitoring and account validation can mitigate fraud risks and ensure that organizations are better prepared to fend off attacks.


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    As fraud attempts on businesses continue to rise, accounts payable (AP) departments are facing increased risks from cybercriminals. Nearly all United States companies are experiencing multiple attacks each year. This highlights a paradox: The growing reliance on digital technologies has introduced new and emerging security threats. However, the alternative — relying on manual processes — leaves firms even more vulnerable to fraud.

    By understanding the evolving landscape of payment fraud and the tools available to combat it, businesses can take proactive steps to protect their financial operations. Advanced automation and fraud detection systems have never been more critical as fraudsters develop more sophisticated tactics.

    AP Departments Face Growing Risks of Cyberfraud

    AP departments are facing rising cyberfraud risks, with more than eight in 10 U.S. companies targeted by sophisticated digital payment fraud tactics. Integrating real-time monitoring and intelligent fraud prevention systems can address these new security challenges, underscoring the need for stronger fraud prevention measures.

    Businesses are under growing attack from cyberfraud.

    A recent report notes that corporate fraud has fully entered the cyber era. Last year, 83% of U.S. companies were targeted by hacking, deepfakes, phishing schemes and other forms of highly sophisticated cyberfraud. Moreover, payment fraud in general is skyrocketing, with the surge in cybertactics playing a large role in this growth. Ninety-six percent of companies experienced at least one fraud attempt last year — up from 56% the year before. Ninety-four percent were targeted multiple times. Wire transfer fraud (53%), vendor fraud (47%) and CEO fraud (44%) made up the top three types of fraud attacks. In addition, two-thirds of firms predicted that fraud attempts will grow in the future.

    83%

    of U.S. companies were the target of cyberfraud activities in 2023.

    BEC is the most common type of cyberfraud affecting firms.

    According to another report, business email compromise (BEC) schemes comprised the lion’s share of cyberfraud attacks on firms. In 2023, 63% of firms were subject to some kind of BEC attack. Payments made via ACH credits were the most frequent target of these attacks, as reported by 47% of firms. Next in line were wire transfers (39%) and ACH debits (20%).

    Such onslaughts can be difficult to avoid. Nearly half of firms say their greatest difficulty in combating fraud is employees not following fraud prevention policies.

    The digital shift of the workforce is raising fraud risks.

    Experts note that the rise of digitization and remote work heightens the importance of cybersecurity measures in the workplace. This leads to a greater need for fraud prevention strategies such as those enabled by digital AP systems. Automation can quickly alert firms of unusual activity or inconsistencies that could indicate fraud.

    Legacy Payment Processing Fuels Scams

    While increasing digitization has expanded the presence of cyberthreats, manual processes and payments can be even more vulnerable to attacks. Adopting digital, automated solutions that incorporate fraud detection at every step addresses this vulnerability and helps reduce exposure to B2B payment fraud.

    Outdated payment systems leave businesses vulnerable to both intentional and unintentional fraud.

    74%

    of chief information security officers cite human error as their main cybersecurity risk.

    Human error is a growing concern when it comes to cybersecurity. In fact, nearly three-quarters of chief information security officers cite human error as their primary vulnerability. That share is up considerably from 60% in 2023.

    Experts note that relying on manual accounting can leave businesses at risk of slip-ups like unauthorized payments and duplicate invoices.

    Checks are still the primary fraud target for businesses today.

    Despite new security risks, legacy payment methods offer no refuge. Checks continue to be the most fraud-prone payment method, with 65% of organizations reporting they experienced check fraud in 2023. This was nearly twice the share of firms (33%) reporting fraud attacks on the second-most vulnerable payment method, ACH debits. Even so, 70% of firms using checks expressed no plans to discontinue their use. Three-quarters of all organizations continue to employ this risky legacy payment method.

    AP Automation Helps Fight Fraud

    The current risk scenario calls for greater reliance on secure, end-to-end payment platforms with built-in fraud prevention measures. Real-time monitoring and account validation can mitigate fraud risks and ensure that organizations are better prepared to fend off attacks.

    AP automation yields a noticeable impact on fraud reduction.

    To combat the vulnerabilities of manual AP processes, companies are leveraging modern, fully integrated AP systems. Solutions that automate validation, enforce compliance checks and monitor transactions in real time significantly reduce fraud risks while streamlining operations.

    PYMNTS Intelligence research finds that payment fraud prevention is among the top benefits mid-sized firms expect from automating their AP or AR processes. Approximately two-thirds of these firms have at least partially automated payment disbursements. Moreover, 91% of these businesses plan to automate more AP operations going forward.

    91%

    of mid-sized businesses are progressing toward further AP automation.

    AP automation is gaining ground through key partnerships, improving fraud protection.

    Several companies are partnering to integrate artificial intelligence (AI) into AP systems, providing enhanced fraud detection and greater operational efficiency. For example, Finexio and Emburse have teamed up to offer AI-powered AP automation solutions.

    Experts recommend a range of digital procedures to identify suspicious activity.

    Implementing financial controls like know your customer (KYC) and anti-money laundering (AML) protocols is essential to mitigate losses from fraud. Experts also advise screening transactions against the Office of Foreign Assets Control (OFAC) Sanctions lists.

    Automation can incorporate these tools directly into the AP workflow, ensuring that each payment is thoroughly vetted without sacrificing efficiency.

    Strengthen AP Security Against Attacks

    To protect AP departments from rising fraud threats, companies must take immediate steps to modernize their processes and enhance security. The rise of digital payments and remote work demands a proactive approach to prevent costly attacks.

    Firms can mitigate these risks by adopting the following strategies:

    • Upgrade payment systems. Move away from legacy systems, such as manual or paper-based processes, to help close vulnerabilities that fraudsters often exploit.
    • Leverage automated AP systems. Streamline processes with automated systems to reduce human error, detect irregularities and get alerted about potential fraud in real time.
    • Strengthen employee training. Regularly update staff on the latest fraud tactics as well as fraud prevention policies to minimize risk from internal oversights.
    • Implement advanced fraud protection measures. Utilize features like AI monitoring, KYC protocols, AML systems and sanctions screening to bolster fraud defenses.

    By prioritizing these key areas, businesses can reduce their exposure to AP fraud and better safeguard their financial operations. Automation, enhanced security measures and a well-trained workforce provide a strong foundation for combating these evolving threats.

    Acting now is critical to prevent future losses as fraudsters continue to develop new tactics. Companies that adopt comprehensive fraud prevention strategies today will be better positioned to protect their assets and ensure long-term security.

    Ernest Rolfson

    Fraud continues to evolve, and businesses need to adopt advanced, proactive strategies to stay protected. Modern AP automation and intelligent fraud detection systems are critical to safeguarding financial operations against these rising threats.”

    Ernest Rolfson
    CEO

    About

    Finexio is a trailblazer in the B2B payments industry, pioneering an innovative Accounts Payable Payments Infrastructure as a Service model. Embedded within the world’s leading Procure-to-Pay software suites, Finexio’s platform delivers a fully managed, AI-powered solution that optimizes, monetizes, and secures the entire payment lifecycle. Our comprehensive infrastructure seamlessly orchestrates payment delivery, streamlines supplier management, prevents fraud, enables payment monetization, and provides robust analytics and reporting. This unique approach transforms AP from a traditional cost center into a strategic revenue generator. Learn more at Finexio.com and follow us on LinkedIn.

    PYMNTS Intelligence is a leading global data and analytics platform that uses proprietary data and methods to provide actionable insights on what’s now and what’s next in payments, commerce and the digital economy. Its team of data scientists include leading economists, econometricians, survey experts, financial analysts and marketing scientists with deep experience in the application of data to the issues that define the future of the digital transformation of the global economy. This multilingual team has conducted original data collection and analysis in more than three dozen global markets for some of the world’s leading publicly traded and privately held firms.

    The PYMNTS Intelligence team that produced this Tracker:
    Managing Director: Aitor Ortiz
    Writer: Carson Olshansky
    Senior Content Editor: Alexandra Redmond
    Research Analyst: Mariano Soler

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