Reducing Your Risk from Fraud using Xero
According to a recent report by the Royal United Services Institute, fraud has reached epidemic proportions and should be regarded as a national security issue (RUSI).
According to a recent report by the Royal United Services Institute, fraud has reached epidemic proportions and should be regarded as a national security issue (RUSI). According to the Crime Survey, there were 3.7 million reported incidents of members of the public being targeted by credit card, identity, and cyber-fraud (up to March 2020). Credit card, identity, and cyber-fraud are the most prevalent crimes, costing up to £190 billion per year.
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Small businesses with fewer than 100 employees reported 28 percent of all cases of fraud, a higher rate than medium and large businesses, and suffered greater losses in proportion to their size.
The three major types of fraud that you should be aware of are as follows:
- Theft
- Falsification of financial statements
- Misappropriation of assets
In this post, we will discuss how to use Xero accounting software to protect your eCommerce business from fraud, including:
Fraud Potential
Businesses must secure their data when using online services to ensure that your data remains secure and that account email addresses and passwords are not compromised.
Fraud's Consequences
With the current rise in phishing scams in the cyber world, security is becoming a legitimate concern for businesses. If you were a victim of fraud and your personal information was stolen, you could face significant financial losses. To begin, your login information may be altered. Second, bank details with altered payment instructions could be used to transfer funds from your client's accounts to the fraudster's account instead. This type of fraud is becoming a risk for many businesses, so you should take the following precautions to protect yours.
Accounting software saves the day
Purchase invoice processing is vulnerable to fraud. Purchase invoices are frequently manually checked, and the busier the finance department, the more errors are likely to occur. Some criminals rely on this to submit bogus invoices for goods and services never provided, often for small sums, in the hope that their costs will go unnoticed and be paid without any approval process.
However, the introduction of artificial intelligence and automation has resulted in significant changes in the way invoices are checked and processed. This technology is used in cloud-based invoice management to significantly reduce the risks of invoice fraud. Automated invoice processing scans invoice attachments, mining and digitising all relevant data. The invoices are then matched with known or approved suppliers in the system and submitted for approval. Typically, 90% of invoices can be handled in this manner, with the remaining 10% being set aside for manual processing or additional scrutiny.
An audit trail can be created by integrating suitable systems with the user's cloud accounting software. The AI component analyses the data and flags any anomalies, such as:
- Unusual billing patterns
- Surprisingly large sums
- Increases in the frequency with which a supplier sends invoices
- Information that is mismatched or duplicate
- Approval of invoices by employees with an insufficient level of seniority.
The Two-Step Authentication Process of Xero
You must implement Xero's Two-Step Authentication Process to reduce your chances of fraud. This adds an extra layer of security to your company and eliminates the possibility of your Xero account falling into the hands of phishing and malware fraudsters. This two-step process will be repeated every time you log in to Xero using a unique code generated by the Google Authenticator App on your smartphone. This can be accomplished by using your smartphone to access your Xero account code.
Step 1: Log in with your usual passwords.
Enter your usual username and password to access Xero.
Step 2: Log in using the second unique code.
Log in using your second, one-of-a-kind six-digit code generated by the Google Authenticator app on your personal smartphone. If you don't have access to your phone, you can instead answer security questions that you enabled when configuring the Two-Step authentication process.
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