Sponsored by AvidXchange
Financial security is more important than ever for real estate organizations navigating today’s new realities.
Criminals are upping their game to take advantage of new opportunities stemming from the personal, operational and technological challenges so many industries are facing.
Real estate management companies must protect not only their employees and tenants amid these trying times, but also their financial data and personal information.
Accounts payable (AP) automation software can help do just that—improving payment accuracy, control and security by replacing manual, paper-based processes with cloud-based technology.
Why Financial Security Has Become a Priority During the Pandemic
Since the COVID-19 pandemic started, IBM Security has observed a more than 6,000 percent increase in cybercrime spam.
They found that nearly 40 percent of study participants believe they’ve been targeted with COVID-19 spam emails, such as phishing campaigns that promise a loan or stimulus check in exchange for clicking on an embedded link. Clicking triggers a malware infection that spreads through an employee’s device, giving criminals access to a goldmine of information.
But, fraudulent AP activities— including malware, check tampering and Business Email Compromise (BEC) — plague organizations regardless of their size or what types of assets they manage. According to JP Morgan’s 2019 report on fraud, 81 percent of companies were targets of payments fraud last year.
Real estate companies and property managers must protect their employees and their businesses by leveraging the right tools and technologies to solidify security efforts.
How AP Automation Can Help Real Estate Companies Improve Security
Of course, there are many tools and strategies to prevent and mitigate fraudulent activity. When it comes to financial operations, swapping out manual, paper-based AP processes for more secure, automated solutions can make a major impact for several reasons.
- Automation Eliminates Paper Checks
An Association of Financial Professionals survey on fraud points to paper checks as the largest vehicle for payment fraud. In fact, about 75 percent of businesses that were victims of accounts payable fraud were targeted via checks which provide an easy way to replicate vital vendor and account information.
A check has names, addresses, the banking institution, the bank's routing number, and the check holder's account number printed right on it. When a check is cut and sent to pay a vendor invoice, it's generally handled by several employees before being deposited. It's virtually impossible to know how many people will see any particular check before it's finally deposited.
Automation removes paper and manual processes that are riddled with risks, replacing them with secure automated processes and offering encrypted and verified electronic payments. Unlike paper checks, electronic payments like ACH and virtual card are routed digitally from one bank account to another through payment systems. Most use automated fraud monitoring tools like Positive Pay to flag suspicious activity and avoid duplicate payments and invoices.
Simply stated, payments are controlled from start to finish, and risk is mitigated.
- Removing Manual Process Reduces Errors
Accounts payable and accounting teams work diligently to ensure payment information is recorded correctly, manually entering data into their accounting system or relying on a spreadsheet to keep them organized and accurate. Despite their abilities and diligence, their work is prone to errors.
Working from home, when your approvers and vendors are too, distances AP teams from their data sources, like files and the mailroom for invoices and checks, making it easy to overlook important information or make mistakes.
Automating replaces the grunt work, like invoice entry, coding and matching, and in turn eliminates mistakes that are inherent to those manual processes. When AP is cloud-based and centralized, nothing slips through the cracks, is duplicated or forgotten.
- Automation Improves Internal Controls
Most real estate businesses depend on controls—like requiring department level approvals, matching invoices to purchase orders, and granting the CFO sole responsibility for signing checks— to securely process invoices, pay bills and protect against fraud.
While intentions are good, these controls are challenging to organize and maintain, especially when the number of invoices multiplies and constituents are physically separated from each other.
Centralized AP allows CFOs and controllers to safeguard sensitive financial information by setting strict guidelines and controls around who in the organization can access it. They can embed payment controls, like segregation of duties and dual-factor authorization, into automated processes that happen repeatedly. They can also add security layers that require multiple approvals and send alerts when suspicious activity is flagged.
- Going Automated Provides Better Visibility
When relying on manual invoice entry and file cabinets for storage, it can be difficult to perform invoice approvals and research working remotely. Access to invoice images and other important invoice information is limited, if not impossible to access. The same can be said for payment processing. How do you provide a cleared check image to a vendor if they are stored in a cabinet at the leasing office or corporate headquarters?
Centralized AP processes provide clear visibility and accountability, making it easier to monitor for fraudulent activity. Teams can easily receive, track and approve invoices with clear visibility into invoice and payment status, regardless of their location, and can scan for duplicates, errors, and suspicious activity.
AP Automation Offers an Impressive List of Security Benefits
AP automation benefits security throughout the entire bill pay and invoicing cycle. It’s an important tool in the fight against fraud, eliminating error-prone manual processes, replacing paper checks with more secure electronic options, improving controls to safeguard sensitive information, and providing clearer visibility to better monitor activity.
If you’re interested in protecting your real estate organization from the rising risk of financial fraud, visit us at www.avidxchange.com to learn more about our industry-leading accounts payable automation solutions.