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How Middle-Market Businesses Can Mitigate Payments Fraud

According to the annual AFP Payment Fraud Control Survey, 82% of businesses were impacted by payments fraud in 2018. While this survey included many enterprise-level companies, results from the 2019 State of Accounts Payable Survey reveal middle-market companies are at risk too, with nearly 60% of companies in the middle-market experiencing instances. What’s even more unsettling is that fraud is perceived differently across all levels of seniority. The same survey saw 68% of executive-level respondents indicating their business was impacted by fraud. 

While fraud may be difficult to detect, there are many ways to prevent it. For middle-market businesses short on staffing or financial resources for the implementation of fraud protection programs, there are a variety of simple, scalable, and cost-effective ways to drastically mitigate risk of fraud.

Ways Middle-Market Businesses Can Prevent Payments Fraud

Centralize Accounts Payable

Centralizing the accounts payable process creates a more organized, efficient, and aligned team. Ensuring a central location for all the accounts payable information is essential, ultimately creating one source of truth for the whole team to work from. It ensures your team knows where to go when handling invoices and allows them to finish projects faster, while also tracking performance. Through a centralized process, team members’ actions are more transparent and more traceable, holding each member accountable.

Employ Segregation of Duties

Much like our government, our payables team needs a system of checks and balances. When individuals are given complete autonomy, power is often abused. Given that most fraud cases are internal, basic systems of checks and balances are foundational fraud deterrents. Implementing separate and distinct duties for managers, approvers, and authorizers ensures payments are processed correctly given the level and amount of access granted to specific individuals throughout the process. The risk of check kiting, receivables lapping, and other fraud schemes will be minimized through these segregating duties and multi-level approvals.

Increase Security Through Technological Tools

Your company’s data is one of your most valuable assets, and as a result, the protection of said asset should be paramount. According to Secure Swiss Data, two-thirds of people use the same password everywhere. Even more worrisome, 90% of passwords are cracked in less than 6 hours. Therefore, a password alone shouldn’t be the only method utilized for protecting critical and sensitive company data. Rather, employing tools such as dual-factor authentication requiring a one-time, unique security code in order to release funds, adds an additional layer of security to deter a potential breach.

How Automation Can Help Mitigate Fraud Risk

Accounts payable automation software programs like MineralTree’s Invoice-to-Pay are viable solutions to mitigate payment fraud risk. Protection from fraud is built into the software program, enabling your team to double check invoices and payments in a secure, cloud-based space.

Plus, automation centralizes and preserves your documents in a central data repository, leaving a clear audit trail. By designating separate roles in the AP process through different login credentials and dashboards makes it more challenging to forge approvals while also preserving receipts of all approvals.

Further, dual-factor authentication is also required in order to decrease the feasibility of account takeovers. With each login, users are prompted to not only enter their password, but also a verification code delivered via email or text message. Through these simple steps, MineralTree’s AP Automation solution can limit instances of payment fraud and protect your organization in the most cost-effective way.

Curious to learn more about how accounts payable automation can help your team leverage electronic payments? Contact MineralTree for a personalized demo.


Meghan Makiver
Meghan is a contributor to P3, and also a co-curator of The P3 Newsletter, a weekly email newsletter covering the best (and worst) in financial strategy.


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