How can you prevent unauthorized invoices?

In my point of view, there should be end to end P2P (Purchase to pay) process in place and reflected properly on the ERP system by setting automated controls on the ERP to ensure the following: A- implement segregation of duties concept (setting approval cycle with clear border lines between functions ,i.e. the person initiating purchase requisition should not approve it as well as purchase order approval should be done by other approvers. B- three points matching to ensure the accuracy of payment , i.e. matching supplier invoice and Purchase order with goods receipts notes , price, quantity and quality) C- 4 eye principle , to ensure that all payments approved by two persons (normally, manager and controller)

in my experience you need to have an established procedures for accepting invoices. first step is to have an approved purchase order signed by the requesting department and reviewed and co signed by finance department. second step is to get at least 3 quotations for the items you are looking to purchase. you need to segregate the buying process from the ordering process. finally there need to be an inspection upon receipt of the purchased item and a review of the prices in the invoice to match with the quotes previously received.

Always confirm your purchase order number with the shipper and cross reference with their pickup number. Both numbers should appear on the invoice.

The first line of defense is the people who will process the invoice. It is important that they are trained to identify and understand when something is not going well. The main point are not to ignore unusual changes : - in the format of the invoice, - in the way they receive it, - in the bank accounts or in the payment method. These are basic flags that they should know and check. Systems and automated processes are important in not being fooled out of habit, but the human factor is also crucial in being able to detect new methods and ways of fraud, where an automated routine could be fooled.

As an expert, I emphasize the critical role of accounting software in preventing unauthorized invoices. In a mid-sized enterprise case study, implementing cutting-edge software streamlined electronic invoicing, reducing vulnerabilities tied to paper-based processes. A multinational corporation experienced a 30% decrease in unauthorized invoices through systematic matching with purchase orders. Real-time monitoring and alerts enhanced efficiency in another case, improving dispute resolution and anomaly detection. Accounting software is a strategic imperative, offering tangible benefits—increased efficiency, heightened accuracy, and enhanced security. These case studies highlight its transformative impact on invoice processing.

This policy should clearly define roles and responsibilities, specifying who can approve invoices, setting approval limits, and outlining procedures for handling discrepancies. Key elements of a strong policy include segregation of duties to minimize fraud risks, multiple approval levels for higher-value invoices, clear criteria for approval such as verifying purchase orders and vendor information, and meticulous documentation and recordkeeping. Regularly reviewing and updating the policy ensures its effectiveness in adapting to changing business practices and fraud risks, providing a comprehensive strategy to reduce the likelihood of unauthorized payments and protect financial resources.