Accounts payable teams of all sizes and industries should consider themselves on notice.
According to the AFP, 78% of businesses experienced attempted or actual B2B payments fraud last year. This number has risen steadily since 2013, and one of the primary causes is the continued use of paper-based and manual processes to capture, approve and pay invoices.
The persistent use of paper checks in B2B payments is becoming confounding as more secure and convenient options for businesses continue to present themselves. Compared to the variety of electronic payment options available, paper checks are much more susceptible to both internal and external B2B payments fraud.
B2B payments fraud is also getting attention from IT teams, which have taken note of this trend too. In fact, 85% of security professionals are not confident their companies have deployed sufficient technology to protect against payments fraud. The bottom line: If your accounts payable team is still using paper-based, manual processes, your entire company is exposed to an unnecessary level of risk every time it receives, processes, and pays an invoice. What can you do about this?
Transition to Electronic Payment Methods
Electronic payments, in contrast to paper checks, offer layers of security by encrypting payment data in transit. Virtual card technology goes a step further by employing the use of tokenization and restricting each payment to a one-time-use credit card number for a fixed transactions amount. But in addition to improved security, electronic payment methods across the board also expedite the payment process providing you with extended working capital benefits and improved command over your cash flow.
Best Electronic Payment Options Available
ACH transfers are electronic payments facilitated by NACHA, and deliver three crucial benefits to businesses in comparison to paper check payments. First and foremost, they are more secure as payment information is encrypted throughout the transfer process. Second, ACH transfers are faster. The duration of an ACH transfer is at most three days, and some businesses can work with their banks to set up same-day ACH transfers as well. Finally, the third major benefit of ACH transfers is cost savings. While paper checks cost$5 per payment on average, ACH transfers can be executed for under a buck.
Credit cards have been under-utilized as a B2B payment method so far. The leading reasons for this have been the hassle of determining which vendors accept credit cards, and the cumbersome process of building out a new payment procedure that differs from the status quo of paper checks that has held fast for decades. However, making the switch is worthwhile. Credit card payment info is also encrypted in transit. And in addition to enjoying benefits of same-day payments, they are also accompanied with cash-back rebates that can run as high as 2% of all payments made. This represents low hanging fruit that drops to your bottom line.
Virtual cards provide all of the same benefits as credit cards, and go a step further to protect your payment info by eliminating the need to ever expose corporate payment information. How does it do this? Tokenization. By generating a single-use credit card number for each vendor payment, there is no way for overarching company payment information to fall into the wrong hands.
Build Scalable Payment Controls into Your Payment Process
If you’re like most businesses, you have taken some measures to establish controls that mitigate B2B payments fraud risk, but are you’re having a tough time enforcing them. Especially if your business (and list of vendors) is growing fast.
Most businesses check the validity of invoice amounts with the department heads that are working with the vendor. They do this by either forwarding invoices via email or handing off the invoice directly. Businesses that use Purchase Orders (POs) check each invoice against their corresponding PO. Then, once an invoice is approved, most businesses are writing checks and delivering them to the CFO to sign before sending.
These practices are excellent ideas to keep the process secure in theory, but challenging to follow through on. If you’re juggling dozens of email threads to get invoices approved, it’s really easy for invoices to fall through the cracks and never get paid. Additionally, it’s easy to forge invoice approvals and very difficult to organize documentation of all approvals for quick access during audits. It doesn’t take long for matching up POs to corresponding invoices to become incredibly tedious as well. And when the final approval for a payment depends on the signature of a CFO, every batch of payments hinges entirely on the availability of the CFO.
Adopting an automated accounts payable process makes it easy to follow through on implementing payment controls. Here’s how:
– Segregation of Duties: AP Automation solutions designate separate roles in the accounts payable process by creating separate login credentials and separate dashboards. Not only does this make it incredibly challenging to forge approvals, but it also preserves receipt of all approvals in one central location for easy access at any point in the future.
– Dual Factor Authentication: AP Automation solutions also require Dual Factor Authentication to decrease the feasibility of account takeovers. Every time someone logs in, they are required to not only enter their password, but also a verification code delivered via email or text message.
– Auto PO Match: For those businesses leverage POs, AP Automation can take the pain out of matching them to corresponding invoices by doing it automatically and flagging any that are mismatched.
With these controls in place, you can effortlessly maintain control over your AP process – even as you continue adding vendors on a monthly basis. MineralTree provides the most complete accounts payable automation solution available to middle market companies, and incorporates all of these payments methods and payment controls into its solution.
Are you curious to see what your AP process looks like with automation? Contact MineralTree for a personalized demo.