How to limit the threat across P2P amid the coronavirus pandemic

 

By Sally Murdoch, Chief Marketing Officer at FISCAL Technologies

It’s no secret that the coronavirus pandemic has had a massive economic impact on industries across the globe but to ensure organisations get through this uncertain period it’s important for them to procure products and service in a safe manner.

With coronavirus spreading to every part of the world there have been a number of factors that have negatively influenced global supply and demand, most notably human error and crime. Any gaps or weaknesses between the procurement, accounts payable and audit departments can allow things to fall through the cracks which will be exploited for criminal gain, impacting the bottom line.

The purchase to pay process (P2P) is the process that glues these departments together. Therefore it’s crucial that organisations are taking steps to protect their bottom line across people, processes and technology to manage these risks.

Some businesses have been quite innovative in terms of coping with these stresses. The first thing they’ve done is to shift orders to secondary or tertiary suppliers to offset issues with their primary suppliers. Other businesses have switch production and have retooled to make completely different products, as seen with the likes of Foxconn the Chinese makers of iPhone who have begun manufacturing surgical masks.

Criminal cash is not warranted in any organisation, let alone during a global pandemic. The key to stopping this is to follow the money and make sure that procurement, audit and accounts payable are joined. Through this, anomalies can be spotted early and that will provide much needed protection to the bottom line in this very uncertain world.

With this in mind we have set out the key areas for reducing P2P risk during the coronavirus pandemic:

1. Be tougher on your controls

The last few months has seen an increase of new processes implemented within organisations, which drives up risk. For example, businesses have hired staff to take on new jobs during the pandemic, resulting in more people have access to new controls and new rights. This means you should now be reviewing systemic controls around your ERP system, looking at who’s got access to that ERP system, and allocate somebody within your team to go through your checklist or accounts payable processing policy with these individuals.

On top of this, it’s imperative to go through that policy and establish what needs updating because undoubtedly some of your processes or signing authorities will have changed. These policies are vital and it’s important that you clearly communicate the changes to these policies. P-card programmes should also be audited and finally running a P2P controls assessment would be very useful.

2. Elevate and support your team

Although most accounts payable teams have been split up due to remote working, it’s important to trust that the team will remain efficient and productive. As most people may remember, the world was going through another crisis in 2008 but instead of it being a global pandemic it was a global recession. What we came up with back then was to empower your frontline teams, elevate them and support them with the best tools. Ultimately, they need to be very much part of the solution creating much stronger internal partnerships with other teams. Most, if not all teams will be working remotely, including Accounts Payable, this means they potentially have more time, so this is a good time to allocate internal projects to some of the team members. Internal projects can provide oversight for the company, as well as look for areas of weakness, doing spot checks on suppliers, double checking payments and running an internal audit cross the P2P team.

3. Your supply chain is everything

There are a range of ways to defend your supply chains. One of the most important is to run frequent  reconciliations and have that reconciliation continuously working in the background to support your accounts payable team with valuable real time transaction intelligence. Some of our customers run reconciliation statements across the top 20 or 20% of vendors, while it is tough in the current climate, this does not need to be done manually.

Another crucial way is to run a suppler payment risk detection on a daily basis. This involves looking at all payments, all the invoices that are coming through, looking at the master supplier file to ensure it has not been compromised and running checks across all the suppliers. This can actually be quite difficult with existing ERP solutions which may not have needed agility in controls, but checklists can be created to do some sensitivity analysis, and therefore independent analysis tools need to be deployed.

4. Maintain your cash

Maintaining cash is of the utmost importance right now. I would recommend creating a P2P cash task force, get them working together against target APIs and see what they can do around AP to generate cash. A lot of organisations are extending payment terms, which is a tough thing to do, but there is a unique way of generating cash. This can be achieved through what we call a Forensic Payables Analysis across P2P which delivers a forensic analysis of all your payments and processes. This will review master supplier files, identify where cost savings can be made, outline improvements that need to be made while providing recommendations, and indicate risky suppliers.

The coronavirus pandemic has had a major impact on the way organisations operate. As a result, it is paramount that companies begin to focus on their staff, trusting the accounts payable team and giving them the best tools that empower them to identify fraud and delay payments until thoroughly validated – especially now when the majority of the workforce is working remotely. Outlining process weaknesses and double checking payments is vital for payables assurance, in turn this helps to limit the threat across P2P amid the coronavirus pandemic.