According to a survey conducted by the ACFE (Association of Certified Fraud Evaluators), on average organizations lose almost five percent of their annual income to fraudulent activity. Due to the negative impact of reporting fraud on the organization’s image, companies tend not to report the loss incurred due to fraud. To protect and safeguard their reputations from getting tarnished, organizations continue to bear significant losses. But with the advancements in record keeping and digitalization of records, companies now have the ability to minimize loss of revenue sustained due to fraud. One of the integral techniques which can play, in fact, is already playing an integral role in preventing and detecting fraud, is data matching.
What does data matching entail?
Data matching is a technique through which the records within a database, or multiple databases, are matched using corresponding values. Data matching entails identification, matching of records that tally with each other within a database. For instance, you could put one single term within the data matching software, and it would churn up every corresponding record that exists within the company database(s). Essentially, data matching ensures an accurate and efficient manner to keep track of inventory or any other form of data recorded in the organization’s database(s). With ever expanding business operations in a globalized business environment, it is a daunting task to keep track of any organization’s records. But with the inception of efficient data matching software and algorithms, record keeping has become quite simple, easy and accurate.
It has made swifter verification, efficient management possible, and allowed organizations to keep track of every single aspect of their operational records in a hassle-free manner. In other terms, it provides companies to find exactly what they need in a vast pool of information and records. The dearth of check and balance and the mountain of records is often something which provides opportunities for fraud.
How does data matching play a role in fraud prevention?
As mentioned at the end of the previous section, people involved in fraudulent activities often use the excessive amount of records as a smokescreen to camouflage their fraud. Data matching offers a solution to see through their smokescreen and catch them right in the act. Previously, employees and even third parties, were able to embezzle and get away with as most of the records were paper-based and finding discrepancies through a large amount of paperwork was a tedious task. But with the digitalization of records, the ratio of fraudulent activity reduced significantly. Nevertheless, due to the plethora of records included in a database, organizations continue to lose a significant proportion of their yearly profits due to fraud.
To fix this issue and sift through humongous databases with a plethora of records, data matching is the perfect solution. Using the latest data matching software and tools, an organization can look into the records of the departments where the company is losing money to identify potential fraudulent activity. It does not only allow organizations to identify and track fraudulent activity but also prevent it. The mere implementation of a data matching software can potentially discourage potential fraudsters.
The impact of data matching on Fraud Prevention
The impact of data matching in preventing fraud is so immense that several governments, such as the United Kingdom, have empowered the state auditing agencies with the powers to use data matching exercise to reveal fraudulent activity. The efficacy of data matching exercises has shown significant positive results in the prevention and detection of fraud, saving up millions of dollars lost by organizations due to fraud every year.
As mentioned above, the British Government amended the Audit Commission Act 1998 in 2008 to empower the state auditor to make use of data matching in tracking down frauds and subsequently preventing fraud. This action taken by the government has decreased the amount of losses incurred by the organizations immensely. Unfortunately, the US legislature has not yet incorporated this latest technology into its state fraud prevention mechanisms. The success of data matching in preventing fraud in the UK can be used an example to follow. By implementing similar mechanism around the world, both in the public sector and the private sector, losses incurred due to fraud can be reduced drastically.
How can you prevent fraud in your organization?
Even if your state agencies have not yet incorporated data matching exercises to prevent fraud, you can take the initiative by implementing them internally, within your own organization. Data matching will not only let your organization prevent fraud but also will provide a way to link records and make informed decisions resulting in increased efficiency and productivity. Let’s face it, uncovering internal fraud isn’t the state auditors’ job anyway, and it’s your company that is losing money due to it. Investing in a data matching product can help you prevent fraud within your organization in a cost-effective and efficient manner.
The popularity and effectiveness of data matching in various applications such as healthcare, criminal record keeping and product identification in large warehouses, has led to an influx of different data matching software and products in the market. The ever-increasing demand for this exceptional technology, there are a number of companies providing data matching products. It is important that you realize that not all data matching software are just as accurate and efficient. The increased demand for the product has led to the influx of sub par products which churn up poor data which has an adverse impact on the organization’s health. Therefore, it is imperative that to conduct an extensive research before deciding upon the most appropriate data matching tool for your organization.
In summation, data matching can do wonders in the field of fraud prevention. It empowers the organization to sift through millions of records to find discrepancies and prevent fraud within no time. Using data matching software, you can augment your company’s bottom line by streamlining your decision-making process and by cutting down losses immensely.