While checks remain the top target, businesses now need to focus on securing ACH transfers too.
For the fifth year in a row, the AFP’s Payments Fraud and Control Survey Report reported an increase in payments fraud activity. The percentage of financial professionals that experienced attempted and/or actual payments fraud has steadily climbed from 62% in 2014 to 82% in 2018.
ACH Fraud is a new trend that has surfaced over the past year, with the prevalence of fraud via ACH debits and ACH credits increasing by 7% over last year, while check and wire fraud actually decreased. This shift is running parallel to another one of the biggest trends in payments fraud: the emergence of Business Email Compromise (BEC) scams as a means to commit fraud. In fact, the percentage of companies impacted by BEC scams reached 80% in 2018, a 16% increase since 2015.
Implementing controls that protect processes leading up to a payment is just as important as utilizing a secure payment method.
These trends are making one thing abundantly clear to finance teams. Implementing controls that protect processes leading up to a payment is just as important as utilizing a secure payment method. One of the most critical processes leading up to every payment that companies need to take action to protect is the invoice approval process. There are numerous ways that teams can be exploited by both internal and external perpetrators at this point in the vendor payment process.
Here are some ways that finance teams can take steps to lock the invoice approval process down:
Implement Segregation of Duties
The same principle of checks and balances that is the foundation of our nation’s government should also be a foundation of your accounts payable process.
Segregation of Duties in action looks like this: One person is responsible for queueing up business payments, and one person is responsible for approving those payments before funds are released.
While invoice payments can be time sensitive, and sometimes it is both quicker and simpler for AP managers to carry an invoice payment from start to finish on their own, this leaves the door open for all kinds of fraud. And while this payment control seems like a no-brainer, 31% of businesses still haven’t implemented it.
Utilize Dual-Factor Authentication
Even with Segregation of Duties in place, this control is only as strong as your company’s password protection. Given today’s incredibly weak state of password protectivity, this doesn’t give you much to feel good about – unless you’re leveraging Dual-Factor Authentication.
Dual-Factor Authentication adds another layer of security by requiring employees who approve payments to enter a unique security code that they receive via text or email every time they release funds.
This extra layer of security mitigates the risk of fraud by discouraging fraudsters that are constantly on the lookout for businesses that lack vigilance around cybersecurity.
Automate Accounts Payable
For any accounts payable team that utilizes manual and paper-based processes, the enforcement of these payment controls will be challenging to keep up, especially if their monthly invoice volume is expected to continue growing.
As a result, many businesses are looking to the cloud. Cloud-based AP Automation solutions not only build all of these payment controls (and more) into your accounts payable process, but they can also increase your team’s efficiency by up to 70%.
While these controls require a certain high level of diligence to uphold manually, automating your accounts payable process ensures that they automatically underpin the process of paying every invoice.
To learn what your team’s accounts payable process can look like with automation, contact MineralTree for a personalized demo.