Checks Are Still Winning The Fraud Race
The Association of Financial Professionals recently released their annual fraud report, and once again, paper checks rank as the primary vehicle for payments fraud in 2013. In the last year, 82% of fraud-affected organizations said that checks were the primary target–a 5% decrease from 2012. Checks were also responsible for the largest dollar amount of fraud loss, with 57% of respondents suffering payments fraud via check.
Check Fraud: How Are They Doing It?
The report also gave a breakdown of how fraudsters are actually carrying out their crimes. Unlike other forms of payment (ACH, wire, etc.), checks are susceptible to more methods of fraud that can be difficult to control both internally and externally.
62% of respondents confirmed that they had experienced MICR line check fraud (61% in 2012)
52% claiming payee name alteration (49% in 2012)
37% said dollar amount alteration (28% in 2012)
16% claimed loss or theft in employee paychecks (14% in 2012)
5% claimed loss or theft of check stock (3% in 2012)
The good news is that check fraud is down overall. The bad news? US businesses, both large and small, still make more than 50% of their payments by paper check. And even worse–a paper check can cost a company between $4-$20, which factors in mailing, processing, reconciliation, and time. In 2010, checks cost US businesses between $26 billion and $54 billion.
Most businesses realize that checks are inefficient at the very least, but despite this knowledge, they continue to do it. Why? Many cite lack of IT resources, inadequate controls & security, poor ERP integration, cost, and a whole host of other factors that are sure to derail AP Automation projects. These reasons, while valid, should not stop businesses from taking steps to pursue an entirely paperless AP process.
Are you looking to make your Accounts Payable paperless without the expense and effort of an IT project? Send us an email and find out how we can help you.
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