Last time I talked about this issue through the lens of CEO fraud, where company officials can inadvertently pass across money when asked for it by seemingly impeccable internal sources. But there’s another variant to this form of fiscal deception, procurement fraud. That’s where a company pays out for materials never delivered, but it also means bribery (taking money under the counter for awarding a contract to a particular supplier), or encouraging suppliers to charge an inflated price then raking off the difference.
And what a lot of fraud that adds up to – maybe 88% of total UK fraud losses, experts estimate. At the same time, experts warn that as much as 20% of all corporate spend in the UK isn’t properly managed. (A lot of these issues are well covered in this BBC article.
In some ways, this has been going on since homo sapiens left Africa; there’s always going to be some variability in the transparency and honesty of interactions where money and people are involved.
Fast forward and we have today’s reality. I think the enterprise is fairly knowledgable around procurement fraud, and for small, micro companies, activity would be pretty quickly spotted. Public sector organisations, large and small, also have, in my experience, some solid anti-fraud and governance procedures around procurement. The issue is really more for the small to medium sized organisation – and these firms are often easy targets for unscrupulous individuals, in both internal and external aspects.
Technology can help, and not just from Enterprise Content Management; Accura, the data analysis arm of payments giant VocaLink, uses smart back-end analytics and its parent company’s massive store of payments data to identify and flag fraudulent payments before the money is transferred, the same way credit card software protects us by working to spot irregular activity.
But the real direction of travel has to be moving, as far and as quickly as is practicable to modern best practice contract management disciplines. Look at your procurement process. Where is the approved supplier list? What are the rules around invoicing with that core set of suppliers? How can you find out where all your money is right now – and is it where you expected it to be?
ECM has a huge role to play combatting all sorts of fraud, including procurement
The reality of life is that there will always be fraud, no matter what current name we use for it. But the promise of technology, allied to some of the best practice guidance available from procurement membership organisations like the IACCM, means that businesses have a hope that this waste of assets can be properly boxed in.
And key to that will be digital invoicing and contract visibility – all things ECM can help in, So let’s get cracking and help those customers out.