Tips on How to Reduce Instances of Payment Fraud

The convenience and efficiency of ecommerce are why it’s a popular mode of transaction between businesses. Because B2B ecommerce allows the account details of recurring customers to be saved onto a system, time is saved for both ends of the transaction.

But it is this very same convenience that has given rise to online payment fraud. Because it’s so easy to simply trust the system, many fail to take a close look at their records. Fraud can, therefore, slip under the radar. Often, companies fail to even notice any discrepancy, until it becomes too substantial to overlook. The convenience, in effect, becomes inconvenient.

So how do you avoid becoming a victim of payment fraud online? Here are a few things that you can do.

Recognize the signs of payment fraud

It is important to know what the signs of fraud are, in order to prevent them from inflicting significant damage to your bottom line. That said, keep an eye out for the following when examining your payables:

Invoice oddities

Oddities to watch out for include irregularities in the invoice number. Either they’re not sequential, or they do not follow an established pattern. There could be gaps in the numbering order, or multiple invoices carry the same number.

Aside from duplicate invoice details, invoices with similar details are worth taking a closer look as well. AuditNet.org offers some examples:

  • Invoice dates are similar when date differences are less than a certain number of days, say, 21 days.
  • Invoice numbers are similar when, after taking out zeroes, punctuation, and alphabetic characters, are exactly the same.
  • Similar amounts can be defined as those that are +- 5% of the other amount, twice as much as another, or start with exactly the same four digits.

Suspicious amount values

Normal amount values typically have cents. On the other hand, fraudsters generally need easy-to-remember values. As such, the tendency is for them to use values with no cents.

Other suspicious amount values involve numbers that are just below the standard approval amount – a sign of a possible inside job among your staff in the payables department. For example: a $1,499.90 invoice value versus a $1,500.00 amount that would require the approval of a manager.

Make the company less susceptible to fraud

As is true for most issues, prevention is more effective than resolution after the fact. There are many ways by which a company could protect itself from the possibility of fraud. Chief among them are:

Regular manual checks of accounts transactions

Even some of the best ecommerce systems have flaws that could be exploited, which fraudsters are only too eager to take advantage. Performing monthly manual checks for invoice oddities and suspicious amount values allows you to correct an anomaly before it results in lost revenues.

This also signals to a fraudster that targeting your organization is a lost cause, thus encouraging them to move on.

Mandatory background checks on creditors 

While it may appear discourteous to not trust a vendor from the very beginning, performing background checks on potential suppliers and partners is essential to keep your organization from falling prey to payment fraud.

This could be as simple as checking whether different supplier accounts possess the same details, if an account’s address is a P.O. box, if the contact information is invalid, or if invoices come at suspicious times for odd amounts.

How Apruve can help

So you don’t fall victim to unscrupulous entities online, checks and balances are a no-brainer. However, implementing a control mechanism that involves tons of man-hours may not be the best use of your workforce, particularly since there are credit management software providers like Apruve that you can use.

Apruve provides a convenient platform where B2B sellers and buyers can perform fast, painless credit transactions. As a buyer, your payables are accurate and accounted for in the system. And as a seller, your accounts receivables are promptly taken care of because Apruve takes on the credit risk involved in extending terms to your customers.

Bottom line, whether you’re buying or selling, credit management tools reduce your chances for payment fraud and help safeguard the financial health of your company. It wouldn’t hurt, therefore, to look into what they can offer.

Posted in B2B Sales, Credit, Management