Managed Payments Services Are a Strong Weapon Against Fraud

Fraudsters increase activity during changing and confusing times, which certainly describes the current environment, with the war in Ukraine, stock market volatility, and the ongoing fall-out from the pandemic, among other issues.

During these times, it’s more critical than ever to be vigilant and make sure you are doing everything you can to protect your finances, and secure your payments, which is an area particularly vulnerable to fraud. A staggering 74% of AP departments experienced actual or attempted payment fraud during the previous year, according to the 2021 AFP Payments Fraud and Control Survey Report.

To increase fraud protection and ease the burden of time-intensive tasks, many AP departments are turning to AP automation solutions that combine software and managed payments services. With these services, the AP automation provider takes on the responsibility of managing and executing payments, along with enrolling suppliers and managing day-to-day payment inquiries. This helps the accounts payable team not only save time and money, but also strengthen the overall security of their payments.

The rising cost of fraud

Companies are bombarded with fraud attempts all the time, and the leading type is Business Email Compromise (BEC). This occurs when a bad actor hacks an email account through phishing or creates a phony one impersonating a supplier or a company executive, and requests a payment or change of banking information to direct funds to a fraudulent account. The impact of successful BEC attacks can be very costly. Over about a five-year period, BEC complaints received by the FBI ended up costing companies over $2 billion. In addition to the financial impact, companies that are victims of fraud can suffer a loss of reputation.

As a result, many companies have been turning to managed payments services to gain greater protection against fraud, as well as to offload time-consuming supplier management and payment execution tasks.

How managed payments services protect against fraud

Here are six ways that managed payments services help to protect AP teams against payment fraud:

 1. Focuses on its core business.

Managed payments services are delivered by dedicated staff solely focused on facilitating payments and managing suppliers. They participate in trainings, and ongoing education on current fraudster tricks and techniques. The team includes certified fraud examiners (CFEs), who have access to the CFE library, webinars, and other content.

2. Puts stringent controls in place.

AP automation providers that offer managed payments services have established rigorous controls and procedures to ensure the proper handling of payments, including a comprehensive change management process that addresses how change instructions are checked and validated to circumvent fraudulent attempts.

 3. Maintains tight security.

Managed payments services providers use powerful cybersecurity software and constantly monitor and update firewall protection. For example, all of our systems at MineralTree are built using hardening standards, and are protected with firewalls and anti-virus, DLP, and IDS software. Additionally, all these systems undergo regular vulnerability scans and penetration testing.

Other types of security include strictly regulating employee and user access to information, classifying and encrypting data, and retaining it only as long as needed.

4. Stays on top of the regulatory environment.

Managed payments providers follow and remain current with ever-changing regulations to reduce corporate risk. For example, as soon as U.S. financial sanctions were placed on Russia, MineralTree immediately executed all the necessary changes to comply with the new mandates.

5. Relieves busy, overburdened AP departments.

Since busy AP departments are often interrupted by distractions from supplier inquiries and other matters, they run a greater risk of overlooking something, missing a step in the process, or another type of human error. By contrast, managed payments services providers have a dedicated team of professionals who are solely focused on overseeing the payment process.

6. Transfers the risk from your company to the provider.

Since managed services providers execute payment, they assume the risk and liability for any payment error that might occur under their watch.

Virtual cards offer the greatest security protection

The payment method companies use can also make a difference in preventing fraud. Consider that 66% of companies issuing checks were targeted by real or attempted fraud in the previous year, according to the 2021 AFP Payments Fraud and Control Survey Report. Companies using ACH fared better, with 34% experiencing fraud, while only 3% of those using virtual cards were impacted. In addition to the financial benefits of receiving rebates with every payment, companies using virtual cards are protected against fraud thanks to the heightened security measures provided by randomized numbers that are authorized for one-time use only.

Automating the end-to-end AP process bolsters security

While managed payments services and virtual cards are strong weapons against external fraud, automating the end-to-end AP process, from invoice capture through payment, offers further protection against fraud. For instance, AP automation platforms like MineralTree TotalAP allow companies to implement and enforce internal controls to prevent employee fraud, such as building in rules and processes, establishing authorized signers, and a segregation of duties. In addition, AP automation provides an electronic trail of every invoice and payment, and the users that handle them. Managed payments services take the burden off AP departments by not only managing payments in the most efficient and cost-effective way, but also by providing critical security protection that gives companies peace of mind, especially during these uncertain times. You can never be too vigilant, and managed services providers make it easy to do.

Bruno Fagundes

Bruno Fagundes is a Compliance Analyst at MineralTree and has been with the company for about one year. Bruno helped establish the Client Onboarding process for Managed Services with a focus on ensuring MineralTree is compliant with KYC laws and regulations. He is CAMS and CFE certified and worked previously at State Street Corporation in their AML and Sanctions compliance program.