All Companies Suffer from Fraud
Companies of all sizes across all industries are at risk of fraud from internal and external sources. One asset in particular that suffers significantly from the risk of fraud is the master vendor file. For most companies, the population of vendors and suppliers is so massive, complex, and multi-faceted that the ability to prevent the presence of fraud is nearly impossible.
The precise cost of fraud throughout the United States is impossible to measure. However, many experts believe the cost of fraud has climbed well into the high multibillion-dollar range. The Association of Certified Fraud Examiners estimates the cost of fraud in U.S. organizations at 7 percent of annual revenues, or $994 billion. Think about the impact on your company – by these estimates, for every $1 Billion in annual revenue, your company is losing $70,000,000 per year. The unfortunate reality is that the information populating your supplier database is one of the most vulnerable and potentially least controlled assets that your organization has. This decisive set of data is at the hub of many critical departments (Accounts Payable, Purchasing, Strategic Sourcing, Tax, Legal, GRC, Finance and more) that are meticulously governed by various complicated external regulations. Suffering from fraud within your supplier population will cost your company significantly in terms of reputation damage, negative press, lost time, missed opportunities, and much more. And as we explored above – fraud can be costing your company millions of dollars every year.
Lavante Fraud Protection
Lavante has built in a series of controls in their suite of Supplier Information Management (SIM) solutions that can identify, manage, and prevent the incidence of fraud throughout a company’s supplier records. To do this, Lavante leverages enhanced controls and configurable workflows surrounding your vendor master setup and maintenance process. By defining rules and governance controls at the master level, Lavante is able to minimize avoidable risk across all downstream transactions and business decisions. With Lavante, companies have a pre-emptive and proactive defense against risk and fraud in many forms.
Lavante can support all functions and areas throughout the P2P process including Accounts Payable, Purchasing, Strategic Sourcing, Tax, Legal, GRC, Finance and more. Customers can capture and manage information specific to their needs to monitor risk factors such as business inception date, annual revenues, employee base, disaster recovery, business continuity, ethics policies, diversity, insurance coverage and levels, and more.
Where does Lavante Fraud Help?
1) Core Data Analysis
Lavante begins every SIM deployment with an in-depth vendor file cleanse and rationalization which will immediately enrich existing supplier information for better data visibility and increased supplier intelligence. The service will also provide decision analytics to support inactivation of old accounts to mitigate erroneous payments to incorrect or non-existent accounts.
The system software will then identify potentially duplicate or related suppliers which will significantly aid in the prevention of duplicate, erroneous and fraudulent payments. In addition, Lavante will search suppliers against employee records and other databases to identify incidences of potential fraud. The identification of related parties will also reveal potential parent-child, associate, affiliate, subsidiary, shared/co-ownership relationships; identify potential areas for conflict or leverage.
As suppliers continue to use the Lavante system to onboard and/or update data, the same automated reviews will continue to run against the new data to continually ensure against outside entities inputting fraudulent data.
How can this help me?
Core data is the most basic element of the supplier record and among the simplest to access for fraudsters. You do not need to look very hard to find examples of this. Let’s take employees for example: The U.S Chamber of Commerce estimates that theft by employees costs American companies $20 – $40 billion per year. Their report also states that an employee is 15 times more likely than a nonemployee to steal from an employer. Unfortunately, 75% of employee-related crimes go unnoticed.
Lavante SIM offers very simple but powerful tools to monitor employee fraud and prevent this type of otherwise unseen loss.
2) Certification Management
Lavante’s certification management allows clients to determine key certification AND key certification attributes, such as certification numbers, document numbers, materials classifications, company/employees size and much more. Where possible, this vital information is matched against third party databases to ensure that suppliers have categorized themselves correctly and that that has successfully completed all necessary information to complete their certifications.
The intelligent certificate management and communication engine enables advanced notification of documents reaching expiration allowing customers to stay ahead of expiring documents. This can be done for any document or certification including, but not limited to certificates of insurance, diversity, small business, ISO, contracts, W9/W8 forms, or any customer-specific requirement.
How can this help me?
Fortunately, there are many different regulating bodies that are interested in identifying and stamping out fraud. In the pursuit of these goals, multiple regulating bodies have created a number of certifications that will help ensure the standing of a supplier as a well-intending entity. Lavante’s Certification Management gives enterprises the near unlimited ability to vet their suppliers against the data resident in these third party databases to ensure that you are only working with approved and accredited companies.
3) Validations You Can Trust
Lavante’s portfolio of supplier self-service and 3rd party validation points help protect our customers against all forms of identifiable fraud and risk. Below are just a few areas where Lavante validation services will help protect clients:
- Validating TIN will reduce the risk of fraudulent payees, IRS B-notices, and potential IRS penalties
- Validating TIN enables the ability to check against OFAC and similar lists
- Capturing W9/W8 forms to adhere to the IRS documentation and expiration requirements (note: Lavante SIM meets the IRS definition of e-signature)
- Validate USPS address to mitigate against erroneous and fraudulent vendor accounts
- Validate banking information, both account and routing information; through validating the ABA and that the account exists within this ABA, we can determine with high certainty the validity of the account
How can this help me?
Lavante offers a wide range of validation services against a near unlimited set of data and documentation. These services perform as both validations and/or screenings against databases.
Validations are important to assess the validity of data; in the most extreme cases – fraudulent entities can attempt to issue blatantly false data such as providing a false bank account that will re-direct funds to the wrong parties. With the ongoing vigilance of Lavante validation services on Lavante SIM, companies can rest assured that the companies they do with are not attempting to send incorrect data
Screening is vital to ensure that companies are not doing business with any entities that have appeared on government watch lists. In a very relevant example; companies across the U.S. are constantly asked to ensure that they are engaging in any commerce with firms that appear on the OFAC list. Failure to perform this screen can result in heavy fines and even jail time for executives of the transgressing companies. In the last few years alone the U.S. treasure has levied billions of dollars in fines to companies across all industries. Lavante Validation services can set validations and screens in place and schedule them to run at key intervals to ensure your protection against many different forms of fraud and risk.