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Using Technology to Identify Errors and Prevent Invoice Fraud in the Factoring and ABL Industries

May 25, 2021, 05:00 AM

Unfortunately, factors and asset-based lenders are constantly at risk of processing errors or invoice fraud being committed against them. Monies are forwarded to their clients based upon presentation of invoices submitted and in many instances the invoices are processed without the proper review protocols.

The discovery of problematic invoices with errors or fraud “after the fact” is too late.

Photo of Jeffrey Knopman - President - Profit Solutions Group, Inc.

Fortunately, today’s technology offers a shield to protect the lenders’ financial interest by identifying errors and mitigating their exposure to invoice fraud losses, which can amount to hundreds of millions of dollars per annum.

Robotic Process Automation (RPA) is a significant and critical tool in helping detect problematic and fraudulent invoices. The solution can be obtained economically by utilizing cloud-based solutions.

Manually reviewing all incoming invoices presents a challenge for businesses. It is time-consuming and prone to errors due to the natural human tendency to drift while carrying out a tedious labor-intensive process. Visual inspection encounters the same issues as data entry. Once a mistake is made, the mind does not adjust, and the same mistake is made a second time. The need to review several different criteria simultaneously, adds to the challenges of manual review. Finally, it is exceedingly difficult to manually verify all the criteria needed to detect errors and fraud for high invoice volumes, sometimes in the thousands. At times, resources available to review invoices are limited or stretched, which can delay review, cause shortcuts to be taken, and/or cause errors from being hasty.

Photo of Gary Halleen - President and CEO - API Outsourcing, Inc. / Centreviews

The use of RPA allows reviewing many different criteria to provide a thorough review of each invoice. The appropriate software allows setting parameters for each of the different criteria based on the client/debtor invoices being evaluated. Automating the process allows thousands of invoices to be reviewed per minute.

Different criteria are important to allow reviewing dates, accumulative dollar amounts for individual buyers, rounded dollar amounts and several other items. It also allows detection of invoices exceeding certain terms, aggregate of credit memos and many more similar criteria.

Another significant advantage is that RPA cannot only detect fraudulent invoices but can also catch errors the factor and the client make. The detection of these normal human errors can save significant staff time that is required to clean up mistakes and get funding corrected. In the case of fraudulent invoices, you are protecting against lost funds. In the case of errors, you are reducing labor that is associated with the correction process and avoiding increased funding risks.

Problematic invoices cost businesses time and money to identify and resolve. Potential exposure to fraud means that every invoice needs to be reviewed for any discrepancies or issues. RPA automatically identifies problematic and fraudulent invoices to reduce losses utilizing a company’s unique invoice criteria. RPA allows you to save resources that would normally be dedicated to resolving these issues, or that would be lost to discrepancies that were never identified.


Jeffrey Knopman
Co-Founder and President | Profit Solutions Group, Inc.
Jeffrey Knopman is co-founder and President at Profit Solutions Group, Inc., a chargeback recovery/deduction management outsource company which began in June 1999. PSG assists consumer product companies in reducing their dilution rates. In addition, PSG works with lenders in helping their troubled clients remain “in formula.”
Prior to starting PSG, he held senior executive positions at major apparel companies in the areas of marketing, sales, merchandising, licensing, financial analysis, and recovery of chargebacks and deductions issued by retailers. Knopman was involved in structuring and negotiating profitability goals with major retailers. He attended the Baruch School of Business, City University of New York, graduating with a BBA in Finance and Investments with a concentration in Economics and Accounting.

Gary Halleen
President and CEO, API Outsourcing, Inc. / Centreviews

Gary Halleen has 30 years of experience in information, technology and back-office automation - beginning with 3M Company, where he was responsible for numerous new product launches. Throughout the 1970s, he was actively involved with various new information management products under 3M's "Office of the Future" initiative.
He founded Com Squared Systems, Inc. in 1980, one of the first companies to develop software for storing computer data and images on optical disk. This technology was sold to customers to automate back-office processes. As a result of the significant market potential, Com Squared was acquired in 1994.
Looking for a new challenge, Halleen subsequently founded API Outsourcing, Inc. in 1998. Since then, API has developed Robotic Process Automation (RPA) provided on a transaction basis to become a leading outsourcing provider of information processes through a combination of bots to provide labor arbitrage for document management, billing and accounts payable for small business, middle market and Fortune 1000 firms. The RPA also provides financiers automated cash management, extraction of open invoice trial balances from buyer websites and detection of problematic and fraudulent invoices.
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