It’s 8:57 a.m. on Tuesday.
An accounts payable (AP) professional is scanning her inbox between coffee sips and morning approvals when a new email pops up: “URGENT: Bank Account Update for Invoice Payment.” It looks like a routine request. The supplier’s name matches one in the system, the tone is professional, and the email signature is identical to dozens she’s seen before. She updates the bank details, approves the payment, and moves on with her day.
By the time the fraud is discovered two days later, tens of thousands of dollars are gone – rerouted to an offshore account that will never be recovered.
Scenes like this play out every day in AP departments around the country. What makes today’s payment fraud so dangerous is that it no longer looks suspicious. Fraudsters have become masters at blending in, using artificial intelligence (AI) generated documents, cloned email domains, and even deepfake voices to impersonate real people. Every step of the manual invoice-to-pay process – from onboarding suppliers to reconciling transactions – offers a potential opening for fraudsters.
This article shows how AP pros can outpace cybercriminals.
The Fraud Landscape in 2025
Payment fraud has reached a new level of sophistication. U.S. fraud losses are measured in billions, with recovery efforts often dragging on for months or even years. Today’s attackers use a combination of technology, psychology, and timing to trick even the most vigilant finance pros.
AP teams are particularly vulnerable because of their position at the intersection of sensitive data and payment authority. A single phishing email or unverified bank account change request can expose an entire organization. Worse yet, the tools used to create fraudulent invoices and emails – things like AI voice generators and domain spoofing kits – are inexpensive, widely accessible, and easy to use.
Every manual step in an AP process can be a potential opening for fraudsters.
The Newest Schemes Targeting AP
Unfortunately, cybercriminals have become experts at exploiting AP’s pressure points.
Below are some of the most common fraud schemes AP departments experience today:
- Business Email Compromise (BEC). Fraudsters impersonate executives or suppliers via carefully crafted emails that look authentic, often urging immediate payment or confidential transfers. These scams exploit trust and urgency, preying on employees’ desire to act quickly and please leadership.
- Vendor Impersonation. Scammers create fake supplier profiles or clone legitimate websites to send fraudulent invoices that appear identical to the real thing. By using nearly perfect replicas of logos, formatting, and even past correspondence, these criminals can deceive even seasoned AP professionals.
- Phony Bank Account Change Requests. Attackers submit falsified Automated Clearing House (ACH) forms that redirect legitimate payments to fraudulent accounts, often supported by forged documentation. Once the money is transferred, recovery is nearly impossible because the funds are rapidly moved across multiple accounts in faraway countries.
- AI-Generated Documents. Deepfake voices and synthetically generated documents are making it harder to distinguish between legitimate and fraudulent transactions. Criminals now use AI to mimic real vendor signatures and invoice styles to pass standard visual checks.
- Social Engineering. Fraudsters manipulate staff into bypassing established procedures through persuasive or emotional appeals, such as urgency, authority, or fear of delay. These attacks succeed because they exploit human nature rather than technology.
These schemes make it clear that traditional AP fraud detection methods alone can’t keep up.
Why the Risk Is Rising
It’s not just that fraudsters are getting smarter. It’s that business operations have changed in ways that give cybercriminals more room to maneuver. Several major trends are amplifying exposure:
- Remote and Hybrid Work. Dispersed teams rely heavily on email and digital approvals, which makes verifying changes or suspicious requests more difficult. This distance often weakens informal “gut checks” that happen more naturally in person.
- Vendor Sprawl. As organizations grow and outsource more functions, they must manage relationships with hundreds, or even thousands, of vendors. Each new supplier adds another potential point of entry for fraudsters to exploit.
- Outdated Processes. Many AP departments still rely on paper checks, spreadsheets, and emailed forms that were never designed for today’s threat landscape. Every manual data entry or unchecked attachment increases the risk of fraud slipping through unnoticed.
- Fragmented Systems. When financial data lives in disconnected platforms, inconsistencies arise, and accountability becomes blurred. Fraudsters thrive in those gaps where communication breaks down, and no one has full visibility.
The combination of outdated systems and advanced criminals is a perfect storm.
Where the Weaknesses Begin
Every instance of fraud begins with an opening.
Understanding where vulnerabilities exist in the AP process is the first step to closing them.
Vendor Onboarding
Fraudsters know that vendor onboarding is often the least controlled stage of the AP process. When new supplier setup depends on emailed forms, PDFs, or spreadsheets, it’s easy for bad actors to pose as legitimate businesses. A single unverified supplier can become a gateway for recurring fraud.
Complicating matters, approval processes for new vendors often differ across departments or locations. Without standardized workflows or automated validation of bank ownership and tax identification data, these inconsistencies create opportunities for criminals to exploit weak links.
Invoice Processing
Email-based invoicing remains one of the most exploited vulnerabilities in AP. Cybercriminals intercept invoices, alter payment details, and resend them, appearing as trusted suppliers. Because these emails mimic prior correspondence, fraud can go undetected until reconciliation.
A lack of automated three-way matching between purchase orders, goods receipts, and invoices makes it easier for fraudulent or duplicate invoices to slip through. Combined with manual reconciliation, the result is reduced visibility and delayed fraud detection.
Payments and Reconciliation
When payments are tracked in spreadsheets or issued via paper checks, fraud prevention becomes guesswork. Spreadsheets lack access controls and audit logs, while checks expose sensitive banking details and can be physically forged. These outdated tools give fraudsters multiple points to exploit.
Legacy enterprise resource planning (ERP) applications add another challenge. They often lack real-time alerts or analytics that could detect unusual payment activity. Without proactive monitoring, fraudulent transactions may blend in with legitimate ones for weeks.
Five Best Practices for Fraud Prevention, Detection, and Response
While the threat landscape is daunting, AP departments can significantly reduce their exposure with disciplined strategies and clear accountability. Here are five best practices to mitigate your risk.
1. Fortify the Front Lines
- Implement multi-factor authentication (MFA). MFA prevents unauthorized access even if a password is compromised, reducing the risk of email account takeovers. Requiring it across all approval points ensures consistency in protection.
- Enforce dual approvals for vendor and bank changes. Requiring two sets of eyes creates a natural checkpoint that blocks most fraudulent updates. It’s a small step that provides enormous security leverage.
- Use positive pay for checks. This banking control cross-references issued checks against presented ones, automatically flagging discrepancies. It provides an additional safety net for organizations still using paper payments.
- Restrict access to vendor master data. Limit editing privileges based on roles and responsibilities. This minimizes insider threats and accidental data manipulation.
2. Detect Fraud in Real Time
- Leverage AI and analytics. Intelligent monitoring can identify anomalies such as duplicate invoices or suspicious transaction timing. These insights help finance teams act before damage occurs.
- Use centralized dashboards. Dashboards consolidate key risk indicators and make it easier to spot trends or outliers across entities. Real-time visibility is one of the most effective tools against fraud escalation.
- Enable instant alerts. Automated notifications for unusual payment activity or unauthorized changes prompt rapid investigation. These alerts shorten response times and limit potential losses.
- Maintain unified audit logs. A single source of truth for all approval and payment activity simplifies investigations and ensures accountability. Consistency also strengthens regulatory compliance.
- Respond Swiftly and Smartly
- Develop an incident response plan. A documented playbook ensures that staff know exactly what to do when fraud is suspected. Preparation eliminates hesitation during critical moments.
- Define escalation protocols. Identify who should be alerted, whether it’s finance, IT, legal, or leadership, and how quickly. Clear escalation paths prevent confusion and delays.
- Conduct tabletop exercises. Simulating fraud scenarios helps teams understand their roles and refine their response. These drills also expose procedural gaps before they become costly mistakes.
- Debrief after every incident. Post-event reviews identify lessons learned and opportunities to strengthen future prevention. Each experience becomes a step towards resilience.
- Empower Your People
- Train staff to recognize red flags. Regular education builds awareness of subtle fraud cues that technology might miss. A vigilant workforce can outthink even sophisticated attackers.
- Encourage a “verify first” mindset. Reinforce that no update or urgent request should bypass verification procedures. This culture shift discourages impulsive approvals under pressure.
- Offer ongoing training refreshers. Quarterly sessions keep fraud awareness amid evolving threats. They also help onboard new employees into secure habits.
- Create a safe reporting culture. Employees must feel comfortable raising concerns without fear of blame. A supportive environment fosters proactive fraud prevention.
- Build a Fraud-Aware Culture
- Recognize and reward vigilance. Celebrate employees who catch suspicious activity. Recognition reinforces desired behaviors and demonstrates leadership commitment.
- Integrate fraud prevention into policies. Update policies to include fraud detection and response measures. Embedding these standards ensures they become part of daily operations.
- Encourage transparency. Regular communication about emerging threats keeps awareness high. Visibility builds organizational alignment on fraud prevention goals.
- Promote shared accountability. Remind all departments, not just AP, that financial security is a collective effort. Fraud defense succeeds only when everyone participates.
How Automation Strengthens Defenses
Automation is a game changer in AP security, replacing human error with structured, rules-based precision. When invoice capture, routing, and payments operate within a unified platform, fraudsters have fewer gaps to exploit.
- Embedded financial controls. Automated approval hierarchies ensure that no one can bypass established protocols, while built-in bank account ownership verification stops fraudulent setups at the source. Each step generates a digital audit trail that simplifies compliance and investigations. Role-based permissions further limit access to sensitive data, ensuring that employees only see what they need to perform their jobs, nothing more.
- Visibility and intelligence. Real-time dashboards allow finance leaders to track every invoice and exception from submission to payment. Automated alerts instantly flag anomalies, while historical data analysis identifies emerging risk patterns. These insights enable AP teams to proactively fine-tune controls rather than react after the fact.
- Secure digital payments. Electronic payments reduce exposure by encrypting sensitive data and masking bank details with tokens during transmission. Automated payment routing ensures adherence to segregation of duties, while every transaction is instantly traceable from approval to reconciliation. The result is greater transparency and far less opportunity for fraud to hide in the cracks.
Building Your AP Fraud Action Plan
Protecting an AP department requires structure, accountability, and continuous improvement.
Here’s a four-step framework to guide AP’s efforts:
- Assess current risks. Audit your existing workflows and vendor management practices. Look for manual steps, inconsistent verification, or missing audit trails, then prioritize the highest-risk gaps for immediate remediation.
- Modernize workflows. Digitize invoice intake, approval routing, and payments to remove opportunities for tampering. Automation enforces controls and creates transparency that paper and email never can.
- Partner for protection. Collaborate across IT, finance, and legal to ensure your fraud prevention measures are comprehensive. External experts can also provide perspective on emerging risks and regulatory obligations.
- Measure, maintain, and improve. Establish metrics, such as time to detect fraud or percentage of electronic payments, to track performance. Continuous monitoring and adjustment keep defenses aligned with evolving threats.
The Bottom Line
Fraudsters aren’t slowing down, and neither should AP. As cybercriminals adopt AI and automation to scale their attacks, AP departments must respond in kind with smarter processes, sharper awareness, and stronger controls. When prevention becomes part of the AP culture and automation reinforces every step, fraud loses its leverage.