Fraud is hitting finance departments harder than ever, and CFOs are feeling the pressure. Over two-thirds of CFOs reported at least one fraud attempt last year, with over 52% stating that fraud attempts had worsened over the past 12 months. A significant portion of this is Accounts Payable (AP) fraud, where embezzlement, vendor impersonation, collusion, and even simple manual errors can quietly steal millions without notice.
In today’s volatile climate, CFOs cannot afford reputational or financial losses caused by outdated or ineffective fraud prevention measures. With retaliatory tariffs, looming market corrections, and persistent supply chain issues, the financial stakes have never been higher. One misstep can cost far more than a job.
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Fraud schemes, including invoice and bank fraud, contributed to an estimated $485 billion in global losses last year.
All of this begs the question: Is AP Fraud worsening? In short, yes. With tools available that make scams faster to execute, harder to detect, and more convincing than ever, AP fraud is the most severe in years.
What does AP fraud look like?
The types of fraud are expanding and have grown into a web of complicated and convincing tactics. AP fraud comes in various forms: including internal fraud schemes, such as employee embezzlement, or external manipulation such as invoice cloning, and unauthorised changes to bank account information.
Collaborative collusion between employees and third parties when there is weak oversight. Even non-malicious errors from manual handling, like overpayments or duplicate payments, can lead to significant losses when left unchecked. Much of this stems from outdated, manual processes that cannot keep up with the scale needed to combat these attacks.
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By GlobalDataAP departments are some of the busiest and most overlooked departments, managing a high volume of transactions with tight deadlines, with many employees expected to do their role, while detecting fraud attempts. With AP teams stretched thin, it’s easy for fraudsters to hide suspicious activities in plain sight. Any members of the department, including the CFO, can be targeted by fraudsters who send fake invoices, phishing emails, or fraudulent bank change requests, in the attempt that they may be approved if internal controls are weak. When siloed, paper-based processes are reliant, with the inability to reconcile at scale, AP teams are put into a vulnerable spot to be unable to detect and address the risks.
Weak controls and limited visibility into the invoice process open fraudulent schemes under the guise of legitimate transactions. Fraudsters exploit structural gaps, like poor segregation of duties or weak oversight, worsened by decentralised teams and remote operations. These gaps lead to oversight from manual handling, overpayments, or duplicate payments that result in financial losses. Fraud thrives in environments without structured prevention strategies, real-time monitoring, and clearly defined accountability.
What’s driving the crime surge?
The most significant contributor to the surge in AP fraud is the rise of Generative AI. The volume and sophistication of AI- generated fraudulent content is increasing. These items include highly authentic-looking documents, emails, fake invoices, and deepfake audio that can mimic suppliers or executives.
Even the most vigilant fraud teams now struggle to distinguish legitimate communications from AI-generated scams. 62% of organisations identified Generative AI as a primary contributor to the increase in fraud. The accessibility of this technology has increased dramatically in the last two years, enabling fraudsters to deceive AP departments. Fraudsters are advancing their tactics and getting away with this boom of resources available to them.
Therefore, organisations need to create initiatives to use this new tech and spot threats if there is no clear strategic approach to mitigating fraud risks.
When overworked AP teams lack real-time monitoring, it is hard to detect unusual patterns, leading to weeks of undetected malicious fraud. 90% of organisations do not have a dedicated fraud prevention team, and 38% of organisations expect their AP teams to manage fraud on top of their broader responsibilities.
From reactive to proactive
Without fraud prevention being prioritised, it often becomes an afterthought, overshadowed by day-to-day operational demands, and many may not be aware of recent fraud trends that need to be regularly updated by the teams.
The lack of structured oversight and initiatives to prioritise combating fraud make organisations vulnerable to attacks. As a result, fraud prevention may be reactive rather than proactive, leading to delayed responses, higher costs associated with fraud incidents, and missed opportunities to implement preventative measures.
How to combat AP fraud
When fraudsters get away with fraud, it is too risky to react. If finances and data become compromised, customer loyalty is at risk, leaving the organisation at a loss both financially and in reputation. Investing in preventive measures will mitigate the risk of fraud attacks and improve AP team operations.
AP Teams need to embrace automation and adopt AI-powered detection tools. The relatively low adoption of automated fraud detection tools suggests that most organisations rely on traditional manual controls, such as segregation of duties and vendor verification, as well as secure payment practices.
AI as an essential tool to combat AI-generated fraud
To combat AI-generated fraud, AI becomes a great tool for organisations to stay ahead of evolving tactics and to match the speed and sophistication of the attacks against them. With GenAI accelerating both the scale and believability of scams to help detect the patterns, finance leaders must match speed with sophistication.
The most resilient AP departments treat fraud prevention as a core operational function rather than an isolated incident, establishing cross-functional fraud prevention teams, such as collaboration between finance, IT, and legal departments. Collaboration allows for expertise across different functions that would widen the scope of the investigation, however, it is only effective when you have accurate information that can be shared across departments. Effective fraud prevention depends on consistent, high-quality data is that is accessible and integrated across ERP systems.
Having a dedicated team for fraud prevention to ensure all processes and data are properly managed is the ideal defence against this ever-evolving threat. Fraudsters use the gaps in training and the lack of team availability to deceive AP teams, using ever-evolving tactics, including leveraging GenAI, to find unguarded endpoints. Continuous training ensures that employees remain vigilant and are prepared to detect and protect against new fraud schemes, with 53% of organisations citing regular staff training on fraud prevention as part of their AP strategy.
Fraud won’t wait, and neither can CFOs. AP teams need to make fraud prevention the top priority for their organisations and cannot remain a secondary issue to be dealt with only when it arises. CFOs need to invest in future-proof strategies today to safeguard not only just their balance sheets but also their reputations and resilience.
Tom Santacroce is Global VP of AP Assurance at Basware
