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Will Purchase Order Software Protect Your Business from Fraud?

This article takes a brief glance at the routes in which purchase order software is utilized as a part of business and specifically with respect to fraud prevention. In today’s economy you want to build a proficient system while also protecting yourself from fraud. It is important that you remain cautious in today’s quick moving universe of business, yet at the same time continue moving forward. Cautious doesn’t mean to put the brakes on and stop implementing better systems. In the event that you don’t stay aware of and participate in new developments under the excuse of being cautious, you may inadvertently put your business at further risk. A key component to a comprehensive risk prevention plan is the utilization of purchase order software. Such software permits you to investigate your information, accelerating better business practises, automate processes and spare you time creating better efficiency.

You can invest additional time into risk prevention and monitoring since purchase order software liberates you up from investing all your time managing smaller scale tasks. The proficiency of your business model can be enhanced on many levels by taking advantage of the numerous characteristics purchase order software offers. A few examples are having the capacity to set up programmed item orders when your stock is running low, reports at the click of a button, and automatic matching of PO’s to deliveries, and the list goes on.

All your monetary transactions will be recorded so you can quickly view cash flow in real time. Just as you can easily view big picture summaries, the software will allow you to easily dig deeper and see the details of specific orders, returns and other client transactions. Profits grow as efficiencies improve through the use of purchase order software. All your data will be secured with the latest security measures. Abnormal transactions can be automatically flagged and alerts raised and sent to the appropriate personnel to help stop fraud in action.

As far as risk prevention goes, utilizing purchase order software is one of the best options for you. Paper based systems are difficult to manage and even more difficult to prevent fraud. Software will allow you to benefit from all the advantages of the software with the added security to prevent fraud. Rules can be added to the software that in many instances make certain types of fraud virtually impossible. Think of it as a fraud vaccine; it won’t prevent all fraud just like the polio vaccine won’t prevent all viruses, but it will do the job wonderfully for the areas it is responsible to protect. Other types of fraud become far more complicated and will go a long way to discouraging the fraud from the beginning. And in the cases where fraud is perpetrated, the software can be used to track down and put a stop to it in a timely manner. Purchasing software won’t guarantee protection from everything, but it will drastically reduce the risks involved and help you more quickly stop fraud that sneaks through.

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January 30, 2014
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BY Bellwether
How to Prevent Procurement Fraud, Part 2

Procurement fraud may be one of the more perplexing frauds to explore; there are various  ways it can be committed and when examining it, all alternatives should be explored, but may not be recognized. A basic definition of procurement fraud may be ‘fraud inside the procurement lifecycle of an item or administration, not disregarding long haul support contracts’. The Office of the Deputy Prime Minister (ODPM) characterizes procurement in a different way. The definition states that the methodology of ‘procuring products, works and administrations, coating both the procurement from alternate gatherings and from in-house suppliers. Numerous frauds succumb to the standard of procurement fraud as most organizations acquire items or administrations through some manifestation of procurement activity.

In our previous post on procurement fraud we explored 3 fraud prevention techniques so we want to continue that theme in this post.

Given underneath are 3 steps of procurement fraud prevention:

  • Whistleblower Hotline – Sarbanes-Oxley manages that organizations create private reporting systems for workers. The ACFE, or Association of Certified Fraud Examiners, reports that fraud is a great deal less averse to be discovered by a tip from workers than from interior or outside reviews.
  • Background checks – Assuming that a $90,000-a-year I.T. chief comes to work in a $50,000 vehicle, as purportedly did some of the men in the ERCOT (Elecric Reliability Counsil of Texas) case, or lives in a multimillion-dollar house, it can be a piece of information that the lifestyle doesn’t line up with said director’s accounts and should warrant more in depth background checks.
  • Reinforcement from management that fraud will not be tolerated – Assuming that you have not experienced substantial fraud losses recently, take out what’s called representative contemptibility fraud protection. Italian restaurant, Bucca de Beppo, which had such a strategy set up preceding its fraud issues, has recouped much of what it lost. Rich Erstad, the organization’s general guidance says that they were blessed and had a responsive bearer. Meiners says that in seeking this sort of arrangement, organizations need to answer 40 to 50 inquiries regarding what sorts of budgetary controls and techniques they have set up. Meiners further demonstrates that regardless of the possibility that an organization says it would like to take the protection, we urge them to react to the inquiries. It compels an organization to contemplate the courses in which it’s powerless.

Obviously, the greater part of these measures taken together can’t make your association bulletproof. As per Karen Schnatterly, a white-collar-crime master at the University of Minnesota’s Carlson School of Management, there are continually set to be savvy individuals, who are all ready to discover methods for getting in under the radar. But in the event that the lately defrauded organizations had embraced the 6 fraud prevention techniques we’ve highlighted, they all would have had a much better chance of evading the hit that took them into the headlines.

 

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January 28, 2014
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BY Bellwether
How to Prevent Procurement Fraud, Part 1

Procurement fraud can be characterized as an unlawful lead by which the wrongdoer picks up leeway, keeps away from a commitment or harms his association. The wrongdoer can be a representative, possessor, statutory board part, an official, an open figure or a seller who was included in the buying of administrations, merchandise or holdings for the influenced association. We’re going to look at 6 techniques to help prevent procurement fraud.

Here are the first 3 steps of procurement fraud prevention:

  • Purchasing Controls – As per Joel Bartow, chief of fraud counteractive action at ClientLogic, a business process outsourcer situated in Nashville, organizations need to have a purchasing controls framework to check every seller to verify the organization exists. When that is carried out, that merchant is put into the ‘affirmed seller record. He says that no receipt ought to be paid to any seller who is not on the affirmed record and at the address that has been confirmed. A Website does not mean that an organization does exist, nor does a voicemail service confirm this. A telephone posting is an exceptional hint. So is a discussion with a true receptionist. One warning is that when receipts are submitted that have not been collapsed, which implies they have not been sent rather, they have been made at the workplace and slipped into the framework.
  • Segregate Duties – As per Cary Meiners, second VP of monetary and expert administrations at St. Paul Travelers, which is an insurance agency in St. Paul, one of the underlying empowering agents of procurement fraud is an absence of division of employment obligations. For instance, you can’t have the same individual endorsing contracts and doing the reviews. There is no balanced governance set up in that sort of a circumstance. In organizations experiencing mergers and acquisitions or quickened development, he includes, these governing rules are especially liable to succumb to the wayside, leaving the associations defenceless.
  • Audits – Much of the time, as per Karen Schnatterly, a white-collar-crime master at the University of Minnesota’s Carlson School of Management, fraud comes to fruition when there’s a tight inner circle inside an association, particularly one in which the people feel entitled and maybe a little more intelligent than any other person in the room. The Association of Certified Fraud Examiners (ACFE) agrees, noting that when more than one individual commits fraud, the average misfortune climbs drastically. At the point when different culprits scheme a fraud, this makes it less demanding to evade hostile audits harmful to fraud controls.

 

Check back next week to get Part 2 and the remaining procurement fraud prevent recommendations.

January 23, 2014
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BY Bellwether
Why is Procurement Fraud A White Collar Crime?

White collar crime takes many shapes and forms and no segment of business is immune from this risk. However, procurement fraud is one type of white collar crime that is often overlooked. In its most basic form, procurement fraud exists in certain circumstances. These circumstances occur when an element picks up leverage, evades a commitment or causes a misfortune through exploitative activities of a substance, foreman, open servant or person who is included in said procurement.  So why is procurement fraud grouped as a type of white collar crime?

Numerous business managers consider procurement fraud as simply stealing paper, pens, and other office supplies for personal use. They may even consider it a normal cost of doing business. But this white collar crime can be far more serious even though it is not noticed. This may be because of the way that transactions that include procurement fraud show up among numerous honest business transactions. These transactions happen between a business and sellers that are thought to be genuine substances.  On top of that, numerous businesses who succumb to a procurement fraud plan, don’t report it to the higher powers, rather deciding to settle the issue in private. 

The accompanying is a genuine illustration taken from a recent news distribution that highlights the way that a business of any size may succumb to procurement fraud. One case of procurement fraud is highlighted in the San Francisco Chronicle’s online news production SFGate.  The story is of a little store in Quincy, Massachusetts that is called Pat’s Mini Mart.  The store owner was accused of executing procurement fraud that included permitting clients to utilize their Food Stamp cards as ATM cards. He did so with a specific end goal to withdraw aggregates of money as opposed to utilizing the trusts to buy food nourishment as they were permitted to do.

The owner and manager of Pat’s Mini Mart is a man named Pat Lu.  The plan was generally straightforward: A person who was a Massachusetts Food Stamp beneficiary visits Pat’s Mini Mart with their EBT (Electronic Benefit Transfer) card. They utilize the card to make purchases in the store.  The unlawful component of the transaction was that Lu would charge the card for much more than the real buying cost of the items and then hand over additional cash to the customer while keeping a portion for himself as a fee for this service.  Pat’s Mini Mart would receive the full finances from the transaction as payment from the government.  These transactions are completely illegal despite the fact that it will appear to be a genuine transaction when the ledger shows up as payment for goods. Trust is questioned here. Altogether, Lu has been accused of almost USD 700,000 in fraudulent transactions, accordingly defrauding the legislature of well over half a million dollars.  He profited an average of $30,000 per month for the duration of this scheme. Six customers have also been charged and another fifteen are being investigated.

As you can see from this example, procurement fraud can be far more serious than swiping a few pens and paper. It can also be difficult to spot when masked my seemingly real transactions. What is your company doing to protect against this very real crime? 

January 21, 2014
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BY Bellwether
Procurement Managers – Leading Company Innovation

Getting a new perspective on your position as a purchasing manager can mean better things for you and your company. So take a moment to consider your role in innovation at your company. Do the company executives, stakeholders, and other department managers come to you for suggestions or consider ideas you have to bring new thing to the table? Even if that is not the case at the current time, it doesn’t mean you can’t think like that.

 

Oftentimes the Chief Information Officer of a company is associated with innovation. Just because that is often part of that position’s job description doesn’t mean no one else can help. Additionally, just because innovation is not part of the purchasing manager job description does not mean it isn’t part of your responsibility as well. We cannot stress enough that introducing thrilling innovations in a company is a major procurement responsibility. Yes, the CIOs, educated in technology, software, hardware, and other infrastructure elements tries to bring just that to the table; But, sadly this is where most innovation ends. Innovation in the most successful companies doesn’t stop there. Procurement enhances innovation in all spheres of the business. 

 

“Innovation” is not just a word thrown around in department meetings, annual reports, and other business meetings. Innovation is an essential ingredient to the success and health of every company. Innovation is a key component in increasing the overall revenue of the company. Innovation often leads to the introduction of new and fruitful products. This helps the company by expanding and evolving how they meet their existing customers’ needs or broaden who their target customer is.

 

As representatives of our company, whether or not you are executives or share in the profits, you should always strive to put the company at the top of your priority list and think of more innovative ways to raise the company to a higher level. All this is not meant to downplay the role that the CIOs play in the success of any company. Instead it is to throw light on one more aspect of procurement. It is just a small nudge to remind everyone involved that innovation is not the job of one, but the job of all.

 

As you grow in understanding, procurement managers should change how they think and feel about participating in innovative practices. Whatever they might feel, there is no doubt that innovation is not only a part of the procurement process, but is often where the best ideas are generated. . 

 

If you are a company executive reading this article and are responsible for organizing creative meetings and wondering who should be included, then along with marketing, IT, and other stakeholders of the company, consider bringing in purchasing and procurement managers or team members. You may very well be surprised at the level of help you will get when everyone is working toward the same goals: innovation.

 

January 16, 2014
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BY Bellwether
Why Should Procurement Managers Study Sales?

Have you ever wondered why should one read an article or book on sales? Well the obvious answer that pops up is that we all are involved in sales and marketing somehow or the other. Beyond this, procurement managers share many of the same qualities and characteristics as sales managers even though they are applied differently. That is why procurement managers can benefit from studying some sales topics; they can learn additional skills to complement their own profession.

The book, ‘The Art of the Sale: Learning from the Masters about the Business of Life ‘ by Philip Delves Broughton, was published a couple of years ago, but many of the concepts discussed are not only relevant today, but can apply to purchasing managers as well. This book is about methods and personalities of those great sales people who often sit on the other side of the table during negations, and pitch you and your procurement staff on the benefits of their particular products. The book is not only about understanding the persuasive methods of sales managers, but also emulating the best characteristics of these people and learning how to apply them to your own life personally and of course professionally.

We all know that sales people are rejected more often than they are accepted. The key to success lies in being optimistic and never stop believing in one’s own abilities. Just because a company executive does not value what you and your team can do, or criticizes you for past mistakes, does not mean you should give up or accept this position. Instead be focused and optimistic. This attitude will help you rise back with new vigor and the positive outlook means you will continue to elevate your performance rather than wallow in self-pity. This never give-up attitude you often see in sale people will serve the purchasing manager well when obstacles arise.

A successful sales person is one, who is driven by a sense of urgency and need to accomplish the task at hand. A purchasing manager who operates with this same sense of urgency will approve requisitions in a timely manner and ensure on-time delivery to the best of their ability. This helps with efficiency within the business which in turns increases productivity.

The sales manager must possess the ability to persuade the customer and lead him or her through an organized sales process. Persuasion is not all about giving an impressive presentation or tricking the customer into doing what you want them to do. Even while dealing with big stakeholders, you should first learn what the other party wants to achieve. The next step is developing your pitch around their aspiration so that you are not offering something in which they are not interested. They must find a way to meet the needs and help the customer understand why this solution will do what they need. Often the purchasing manager is in a similar situation. They have to source a required product or raw goods. They may have to persuade the office worker that a similar product from a different vendor will serve their need equally well, but at a reduced cost and savings for the company. On the other side it may require persuading the vendor to discount their price or speed their delivery to meet an earlier deadline than normal.

The most success sales people are those who set their conversations by asking questions about the customer’s goals, aspirations, strategies and even obstacles. But if you are not focused and do not know what you want then you cannot be successful. Your final destination should always be crystal clear. Purchasing managers who just go through the motions and do what they are told are not nearly as valuable as one who asks questions. Taking a little time to ask questions can allow you to better serve your customer – the company.

We often believe that being aggressive is not good and frowned upon. Sometimes in n attempt to avoid being aggressive we err on the side of caution, becoming too passive. Sales people need to find a balance in promoting their product. They should have full confidence in the value of their product and truly believe in the good they have to offer. Purchasing managers must also find a balance between aggressive and passive as the tackle the challenges facing them in order to achieve a new level of excellence for their department.

Let the sense of optimism and the confidence in your own abilities carry you upwards on the path of success.

 

January 14, 2014
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BY Bellwether
Does Cloud Procurement Fit in with Smartphones and Business Apps?

In this highly tech-savvy world, people in part of the world, even the most remote locations, want to be connected and available to their prospective, valuable clients at any time of the day or night, 24 hours a day, 7 days a week. Business communications, meetings and deadlines are met with utmost importance. All of this is made possible in today’s life in large part due to the ‘Smartphone’. Smartphones, and their apps, are no longer a luxury but a necessity for every individual involved in a competitive market. The utility of these smartphones have increased multiple times over, spilling into all aspects of the business world including, but not limited to procurement.

Along with these smartphones comes the seemingly never ending list of apps developed by many different third parties which take full advantage of the highly technologically advanced platforms. These advanced business apps have made communication and connectivity more transparent across the world for businesses of all sizes, both small and large. Many business professionals use various apps to keep the workplace running even when they are travelling, to be in touch with their prospective customers and to ensure products are delivered on time.

A few examples of the important business apps available for use on your smartphone are Dropbox (storage app for all important files and documents that can be shared between multiple users in different locations with realitme updates), Docusign (app to send, sign and save documents on any device), Skype (app for online video streaming), GPS tracking pro (app for keeping track of any movement of any person anywhere in the world), even silly sounding apps like Remember the Milk (a to-do app for your Smartphone), and many more.

In some ways it is like the paradox of which came first, the chicken or the egg. Every day innovative apps are being developed which is leading to a huge rise in the demand of the smartphones. More people, for both personal use and business use, are switching to smartphones which is also leading to a huge rise in the demand for apps. Most of the business apps built are cross–platform apps which increase their usability feature and can be used in any smartphone or handheld devices. In today’s world of Information Technology, the agile methodology has great importance with its iterative model of development and delivery. Hence, the business professional are working towards the solutions that fit with these new technologies and cloud procurement by its very definition is built for this time and age.

Cloud procurement would help the users to gain access to their needed IT tools whenever they need and at any place. As long as you have internet access, readily available through smarthones and other mobile devices, you can access your procurement system in the cloud. This technology will greatly improve in terms of efficiency and reduce the expenditure costs as there would be no need of maintaining and purchase of any hardware devices as such. The cloud procurement solutions help the business professionals gain deeper insights in to the activities across various line of business in their organisations through different reporting tools and dashboards. Users have the access privilege to data from anywhere in the world. Cloud procurement is a natural solution to today’s technology environment.

January 7, 2014
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BY Bellwether
How to Create a Sustainable Closed Loop Procurement Strategy

Procurement is defined as the purchasing or sourcing of different goods and services for commercial purpose. There are many business owners who outsource their products without following any proper procurement strategy and it eventually affects our environment. Procurement is typically addressed through a specific department of business persons where goods and business related services are being bought or outsourced. However, proper procurement strategies are extremely important because they can help any business unit in achieving its goals and objectives. Planning a closed loop procurement strategy for your business, while also minimizing your impact on the environment, is not only possible, but better for business.

A closed loop procurement strategy can strengthen your relationship with your suppliers and clients and help you to minimize your maverick spend more efficiently. Below listed are a few important guidelines that you can follow in order to make your purchase to pay plan a sustainable, long-term procurement strategy.

  1. Collaboration among you and your suppliers is an essential component to your success. You can involve your suppliers and make some strategic decisions because it will eventually reduce the potential fall out of your corporate unit. You can add more suppliers to your business and form a team. Make sure that your team of suppliers is implementing different designs as per the initiatives you lay out for our environment. They will also help your business to collaborate well at different levels.
  2. If you are a small to medium business you may think you don’t have a significant impact on environmental concerns or you may think you don’t have the resources necessary to address these concerns through a procurement strategy, but you would be mistaken on both accounts. One option to consider is joining one or more buying collectives that are benefitting your business unit and help you increase profits while also collectively working to help meet sustainability goals.
  3. Purchasing raw materials that can be recycled will help you to go green. You can also consider using recycled materials and waste products as a resource. Many researches and survey reports also say that about 10 to 15 jobs can be created for individuals from every 1000 tons of waste. Even small businesses would be amazed at the amount of waste generated annually.
  4. Utilizing a cloud-based purchasing system is affordable to even small businesses. They don’t require huge capital investments, equipment upgrades or new IT personnel. Everything is done online and is sustainable.

This is not an exhaustive list, but these tips will help get you moving in the right direction to eventually help you in planning out a proper, eco-friendly procurement strategy for your business unit. 

January 2, 2014
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BY Bellwether

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