Here are the Top Tips for Preventing ACH Credit Fraud

Here are the Top Tips for Preventing ACH Credit Fraud

January 4th, 2022 Jeremiah Bennett Leave a comment

Forced to work from home during COVID-19, accounts payable departments have accelerated plans to move away from paper checks and pay more of their suppliers by ACH. That, in turn, accelerated another trend: fraud. Through social engineering, fraud attacks on ACH credits are most commonly known as Business Email Compromises or BECs.

According to the 2020 AFP Payments and Fraud Control Survey Report, for the first time, in 2019, BEC schemes were the most common type of fraud attack experienced, with 75 percent of organizations experiencing an attack and 54 percent of those reporting financial losses. ACH credits—outgoing payments from buyer to supplier—were targeted in 37 percent of BEC schemes.

The problem has only gotten worse in 2020. In the September edition of their Fraud in the Wake of COVID-19 Benchmarking Report, the ACFE reports that 90 percent of respondents have seen an increase in cyber fraud frequency from July through August. This included BECs.

Three-quarters of respondents said that preventing and detecting fraud has become more difficult in the current environment, and more than 90 percent expect attacks to increase. Organizations are under siege, and nearly one-third have received no guidance from banking partners about mitigating ACH credit risks.

What can organizations do?

Defeating BECs requires a multi-pronged approach. Ongoing anti-fraud training is important because these emails are getting more convincing every day. Fraudsters have become experts in user data and A/B testing, which reduces elements that alert their victims of illegitimate changes to their accounts. Strong internal controls are also important and network security, which prevents parties from gaining access to internal systems.

Here are four ways to reduce your ACH credit fraud risk.

1. Handle with Care

Thwarting ACH credit fraud is all about handling supplier banking data securely, which accounts payable must have on hand to transmit their payment file to the bank. This data is often stored in the ERP system, or sometimes on an Excel spreadsheet, where AP staff has been recorded during supplier onboarding. Sometimes it’s stored when a supplier updates their information. Fraudulent change requests are one of the most frequent avenues of attack.

Let’s say you’ve got a new person in accounts payable who isn’t fully trained yet. This person gets an email from a supplier, asking to update their bank account information.

Your new hire, eager to please, fulfills the request, inputting a new routing number and bank account, unaware that a million-dollar payment to that supplier is going out the next day. Nobody realizes what’s happened until two weeks later when the real supplier calls, asking for payment.

By then, it’s too late to reel ACH payments back in. You can call the FBI and the bank. They may try to help you, but if the thieves are sophisticated enough, they’ve already moved the money to offshore accounts, and it’s completely gone.

2. Secure Information

You should never use an unsecured email for banking information updates, although a surprising number of companies still do. It’s too easy for a hacker to intercept one of those emails and use the information within it for their own means. If they get contact or bank account information, they can pose as legitimate suppliers and circumvent internal controls. Some businesses even keep information in spreadsheets or their ERPs, but systems like those aren’t designed to store data securely.

Some companies allow suppliers to update their own information in supplier portals. That might work, provided that companies manage secure portal access and verify all updates. However, if suppliers can log in and update information, it’s likely that hackers can access the same information with very little resistance.

The most sophisticated approach that I’ve seen so far includes a trained procurement team, who verifies and validates all changes that come through.

There are a couple of drawbacks to this approach. It’s a big IT investment with plenty of labor asks. Even then, it’s still prone to internal fraud. At the end of the day, even the best systems will still have their risks. The goal is to minimize them.

3. Look at Fees

Companies often try to shift the risk and time burden to others, with some success. For example, they may choose to pay their suppliers by card., which puts the risk on credit card networks. In cases of card fraud, it’s more likely that payments can be canceled or refunded.

Virtual cards offer even more security because they provide unique numbers, which can only be used by a specified supplier for a specified amount. The big drawback is that not all suppliers accept cards—there are fees to consider.

An organization I’m familiar with pays many of its suppliers with PayPal. Their supplier—most of them small businesses—are located around the world. AP doesn’t have the time or staff to verify payment information, validate bank accounts, and deal with ongoing updates. As the intermediary, PayPal handles all that and guarantees that the funds go to the right place. But, here again, suppliers pay a hefty fee—in the neighborhood of three percent.

4. Shift the Risk

There really is no perfect system in place, which is why we’re seeing ACH credit fraud rise in tandem with the rise in ACH payments. But there is a perfect way to shift the risk to companies that are built to withstand the verification and validation burdens. Today’s payment automation providers manage supplier information, so individual companies no longer have to spend valuable time on it. It’s similar to handing the reins to IT and procurement departments to lock down the database and institute controls. The difference is that working with a provider removes the time investment and liability.

Think of payment automation providers as a means to outsource risk. Their sole focus is to ensure secure, on-time payments to your suppliers without causing costly overhead. They have perfected the systems and processes for hundreds of thousands of AP departments across the United States, and in ways that businesses would be hard-pressed to replicate.

Businesses used to worry about check fraud above all else. While they still have to pay attention to that aspect, it’s become a low-tech form of fraud that’s easy to understand and plan for. As companies shift to electronic payment means, they’re increasingly experiencing sophisticated cyberattacks, which target much larger sums and are harder to defend against. With such attacks growing, businesses may find that outsourcing professionals is the best defense.

_________________________________________________________________________

Jeremiah Bennett is the Director of Information Security for Corpay, a FLEETCOR Company which helps companies of all sizes simplify how they pay suppliers, facilitate treasury payments, and reduce risk.

Archives, Banking, Global Trade Daily

9 Ways to Improve your Cash Management Systems

November 27th, 2021 Mark Penserini Leave a comment

Cash management is always important, but it’s certainly gotten a lot more attention in the past 18 months. The COVID-19 Pandemic spurred me to realize that the enterprise cash management process has a lot of room for improvement.

Amidst all the uncertainty, companies have to keep a very close eye on cash. At the same time, remote work can make cash management harder. It’s hard to keep track of all the paper the payment process traditionally requires when everyone is working virtually.

When virtual work became imperative, there was a cash management scramble. Suddenly, all eyes were on the amount of time and manual effort cash management required. AP professionals were shuffling back and forth from the office to pick up paper invoices and check stock. AR professionals were trying to figure out how to get to the post office or lock box and get checks deposited to the bank. Invoices and checks could be sitting for many days before they could be processed. It was hard to know what was going to happen and when. The lack of consistency, visibility and control were in plain view.

This pain and urgency caused some people to take action. Cash and paper check payments declined 16% year-over-year in 2020, slipping to 45% of B2B payments. Automated Clearing House (ACH) payments rose above $10 trillion for the first time in history.

We saw a lot of companies fast-track payment automation in response to the COVID-19 Pandemic. Nvoicepay has been in business for 12 years, and a third of our customers signed up for payment automation since the start of the COVID-19 Pandemic. We also saw a 26% leap in vendors in our supplier network hopping off the check-only wagon and reaching out to enroll to get paid by virtual card or ACH.

45% is still a lot of check payments, though. Companies are still sending out thousands and thousands of checks every day. Too much time and effort, and too little visibility and control is still the story wherever check payments are being made. Organizations have simply learned to live with the pain.

Why does anyone tolerate such a painful status quo? Either they don’t know there’s a better way, or they’re so absorbed in managing day-to-day efforts that they can’t imagine a different future or feel it may be too costly to change from the way things have always been done.

There is a better way,

When you stop to consider the full impact of payment automation on cash management, it becomes obvious how much better the future could be:

Reduced process costs. By reducing the cost of making payments you’ll improve cash flow right away. Paper costs go away. All that printing, signing, stuffing, stamping and mailing is replaced by just a few clicks. All payments can be made in a single workflow, instead of the three or four you’re probably running.

Card rebates. When you let go of paper checks, you’ll be able to pay more vendors by virtual card. Virtual card payments can generate rebates, which certainly helps with cash flow.

Less time fixing errors. Payment errors are expensive time-wasters. Even though it only takes about 10 or 15 minutes to fix an error, it adds up. It leads to interruption–you have to stop whatever else you’re doing and fix errors repeatedly.

Fewer hiccups. It takes time to void and reissue checks and get the right amount of money to the right place which complicates cash management. When you automate your payments, you don’t have to go hunting for old checks or piles of invoices.

Less opportunity for fraud. Checks still carry the highest fraud risk of any payment methods. Your bank account and your routing number are right there–no phishing or hacking required. The last thing you need when cash is tight is to have money stolen.

Reduced ACH fraud costs. ACH fraud is rising, mainly through business email compromise schemes (BECs). Effectively managing and safeguarding vendor data might require a lot of IT and staff time. Most companies don’t have the resources to do it effectively. Payment automation companies often are able to do that work for you.

Less time handling inquiries. Payment automation companies can handle vendor and customer questions, further freeing up staff time.

Greater visibility. Cash management is so much more efficient when you can see the status of all your payments in real time. With the right payment partner, you should gain access to detailed reporting and insights on your cash flow.

More flexibility. When you can pay everything electronically, and all it takes is a few clicks, you can time your payments with precision. This precision allows you to let go of trying to manage float.

Though the COVID-19 pandemic put a spotlight on painful, inefficient cash management issues, the reality is that the enterprise cash management process has been struggling for a long time.

Efficiency, visibility and control are the most important facets of cash management. If you’re doing paper processing, you might be missing something important on one of those three fronts. When you take advantage of digital payment methods, automate processes and manage your staff’s time better, cash flow management becomes significantly easier.

__________________________________________________________________

Mark Penserini is the Vice President, Partner Management at Nvoicepay, a FLEETCOR company. He has over 25 years of operational and technical experience specializing in project of management across Healthcare, Finance, and IT operations.

Archives, Banking, Global Trade Daily

Why the Players That Focus on Both Sides Will Win the B2B Payments Market

August 24th, 2021 Derek Halpern Leave a comment

Remote work initiatives have created a strong tailwind for digitizing business payments, with companies rushing to move away from checks and onto card and ACH payments. This huge market–roughly 10 times the size of the consumer payment market–is ripe for change. Over the past decade, a decent amount of investment has gone into this area. Everyone is getting into the game: banks, card providers, and fintech providers, for example. It’s very early days, with paper checks still the predominant form of payment in the US. Who will win the market? Ultimately, it will be the players that can best address the needs of both buyers and suppliers.

I’ve spent time on both sides. Before coming to Nvoicepay, which helps automate the payment process on the accounts payable side, I was with Billtrust, which automates accounts receivable. Their founder and CEO, Flint Lane, was a big believer in the need to solve for both sides of the equation. That was my first introduction to the concept. Now, having sold into both accounts receivable and accounts payable, I’m a firm believer as well.

Two Sides of the Coin

There are two sides to every payment—creation and receipt. When it comes to consumer payments, both sides are straightforward, especially with today’s technology. But in the world of business payments, process complexity adds friction between them. Accounts payable’s goal is to manage cash flow by hanging on to money as long as possible. That puts them at odds with accounts receivable, who wants to get paid as quickly as possible. Digitizing transactions doesn’t efficiently address the complexity or friction between the sender’s and receiver’s processes. And the lack of consideration can worsen the issue.

For example, funds sent by accounts payable may hit their vendor’s bank faster with card or ACH payments, but a complicated payment application process can lose the receivable department precious time anyway. Without a way to streamline the process from beginning to end, simply switching to electronic means in a few places may not offer the time savings that businesses hope to achieve.

What’s the Solution?

Portals work well for larger companies that can dictate the terms of doing business to their smaller customers. But their customers may not be happy having their own interests dictated to them. And if you don’t have that kind of authority, chances are your portal will go unused because you’ve created a one-off process for your customers, making life harder for their accounts receivable people.

Electronic means can help accounts payable make payments at the last minute, and they’d prefer paying by card over ACH because they can make money on card rebates. But convincing suppliers to accept card is often a challenge because the accompanying fees can get expensive very quickly. Meanwhile, enabling suppliers for ACH translates to AP managing large amounts of sensitive bank account data.

Many organizations end up “dabbling” in electronic payments because of these enablement challenges. That leaves them managing four different payment workflows–card, ACH, wire, and a whole lot of checks. This is the problem that payment automation providers solve by taking on the supplier enablement process, maximizing card rebates, and simplifying AP workflows.

As much as both sides might agree that digital payments are the future, they’re stuck between a rock and a hard place without automation.

Paving the Way

Fintech businesses like Nvoicepay and Billtrust are bringing automation to payables and receivables separately, and that’s a big step forward. I believe the next generation of solutions will bring both worlds together on a flexible, dynamic platform where both parties to a transaction can choose from a range of options that best meet their needs at any given time.

From an accounts receivable perspective, funds need to be accompanied by enhanced digital remittance information. They could offer buyers incentives in dynamic discounts in exchange for speedy payment and a streamlined cash application process through the platform.

On the buying side, easy access to supply chain financing could allow them to take advantage of such discounts while at the same time extending payment terms. The buying organization takes its two percent discount and gives half a percent to the financing organization, paying the invoice within the discount window. Then the buying organization pays the financing organization in 30 days. Payables manages cash, gets part of the discount and a rebate if they pay by card.

Bringing it All Together

The key to creating these win-win outcomes is including the presence of a technology platform that uses data to offer convenience and choice, allowing organizations to meet whatever their needs happen to be at any given time. For example, if your cash position is good, you may not offer discounts or offer them more selectively. If you work with many small suppliers with tight margins, consider taking the card option off the table.

These are not new ideas, but they haven’t yet been addressed effectively with technology. Historically we’ve tried to do this through EDI (Electronic Data Interchange), a computer-to-computer communication standard developed in the 1960s. It’s always been very clunky, and it is unwieldy for the volume and velocity of data in the supply chain today. However, a majority of organizations still use it for lack of anything better.

Nacha and the Real-Time Payments Network add remittance data to ACH payments, but that’s not a complete answer. There still needs to be some technology put in place to incorporate the data into payment workflows.

Suppose you look at fintech innovation in the consumer payments market as a leading indicator. In that case, it’s been less about new payment products and more about using technology to send and receive money seamlessly, regardless of which electronic network is used.

In B2B payments, fintechs changed the game by thinking about payments as a business process rather than a collection of products, and built software solutions to automate those workflows. With remote work providing an additional incentive, many more organizations are adoping electronic forms of payment. That, in turn, makes data more available to continue developing digital platforms. Whoever gets there first has a good chance of becoming the leading player, but you won’t get there at all if you don’t build for both sides of the equation.

_________________________________________________________________

Derek Halpern is Senior Vice President of Sales for Nvoicepay, a FLEETCOR Company. He has over 20 years of technology sales and leadership experience, including 16 years in the fintech and payments space.

Archives, Banking, Global Trade Daily

How Payment Automation Can Positively Transform Your Logistics Company

June 22nd, 2021 Karl Kangur Leave a comment

Cutting down on your business’ costly, high-effort administrative tasks is always a great idea. Especially when doing so also increases accuracy and limits human errors.

One of the many operational areas where automation can play a positive role in your company is in its accounts payable (AP) departments.

Despite how incredibly admin-heavy payment processes typically are, AP departments still seem stuck in an outdated paradigm. We get it, though. It feels risky to digitize long-established manual processes. It rocks a boat that feels stable, albeit moving really slowly. But digitization and automation, as scary as it sounds, is an absolute necessity if you want to survive in the world of logistics.

As we referenced in a previous article on this topic, the AFP reported that 42% of all payments that businesses make still happen by printed checks. This represents a shocking amount of wasted effort. Especially if you consider the many alternatives available to AP departments nowadays.

At the same time, the payment automation industry has matured significantly. As a result, the available solutions in this space have grown in number, capabilities, and reputation. The genuinely exceptional products in this niche are enabled by innovative technology and supported by intuitive workflows. They utilize reliable, secure financial processes.

Here are some tangible rewards your logistics company will enjoy once you’ve modernized it with one of these automation solutions.

It Speeds up Invoice Approval

According to Stampli, 57% of companies who switched to AP automation did so because it reduces invoice approval time.

In the logistics industry, where businesses rely on the services of many external service providers, unpaid invoices can quickly start piling up. This can cause an admin backlog that’s not only an operational headache to fix but can also have more serious consequences. In extreme cases, unpaid invoices can disrupt supply chains and damage the reputations of both logistics companies and their customers.

Automatic payment solutions typically enable effective workflows that simplify approvals and lower the risk of unpaid invoices falling through the cracks.

These tools act as a dedicated, real-time communication channel between AP staff and other resources within the company. They also offer digital approval mechanisms that almost entirely remove the need for physical interaction and document handovers.

It Improves Morale and Accuracy

Data entry and invoice management both feature very prominently in Business Insider’s list of organizational morale-killers.

Unfortunately, the nature of an AP department’s work dictates that these two tasks take up quite a bit of the average clerk’s time. Repetition leads to boredom, and boredom can lead to a lack of focus and mistakes.

This is human nature. Management or incentivization are not sustainable solutions to this inescapable reality of the manual workplace.

What’s the answer, then? (No prizes for guessing.)

Tools that enable payment automation often include features like automatic data extraction, AI-powered data matching, and character recognition, and automated ledger capturing.

All of these are excellent alternatives to an analog approach that’s compromised by tedium and an inevitable lack of focus.

It Prevents Payments Being Overlooked

People make mistakes. They forget to do stuff, even things that are a core function of their job. No one is infallible.

Even when all the necessary details are taken care of, the human being responsible for clicking on the “pay” button or for taking a check to the bank can still simply forget to do so.

The fallout from this little oversight can be significant. Late payments hurt reputations. They can severely disrupt supply chains. And missing out on early-payment discounts can damage cash flows, especially when dealing with large invoice amounts as logistics companies often do.

By design, automated payment systems avoid this scenario entirely. Each tool offers a slew of features that help AP teams make sure payments are made on time.

It Creates an Additional Source of Usable Data

One of the biggest rewards of being a data-driven company is that strategic decisions can be based on cold, hard facts rather than hunches.

In a professional environment that’s as cutthroat as logistics, we cannot afford to rely on hunches. No matter how much instinct or insight a manager may have, nothing is going to beat meaningful data when it comes to supporting important decisions.

In all likelihood, your logistics company is already using an operations tool like CarLo, Descartes, and SBT to create meaningful information. You may even be using your CRM, accounting, or HR tools to contribute to the data pool that drives strategy.

This is a great position to be in. The usefulness of data improves dramatically as one combines information from various sources within the organization.

If your AP department is still running on pens, ink, and visits to a bank, it’s creating no digital data. And there’s no way for it to contribute to the data stacks that inform important decisions within the company.

A solid payment automation tool will solve this problem, creating cloud-hosted data that your business intelligence software will easily be able to reference.

In Closing: the Importance of Finding the Right Fit

Not all payment automation solutions are created equal. They differ in terms of price, workflow enablement, technical features, and sensitivity to industry regulations.

That’s why it’s vital for you to do a thorough investigation into the products in this space and choose one that best suits your logistics company.

Take your time and think through what sets one solution apart from another. Be sure to invest in one that’s not only ideal for the nuances of your industry but also your company’s established workflows and culture.

This is a big decision. The stakes are high. Don’t hesitate to involve your entire AP team to get their input. Each of them will be able to provide unique insights into their daily tasks and advise on how a particular product could help them or hinder them.

Archives, Banking, Global Trade Daily

HOW TO BETTER PREPARE PAYMENTS FOR FUTURE DISRUPTIONS

April 30th, 2021 Tom Wadlow Leave a comment

A particularly virulent and nasty airborne virus, it has so far accounted for 2.5 million deaths worldwide with more than 110 million cases recorded at the time of writing. Given these numbers only represent reported incidences, the real tolls could well be substantially higher.

The pandemic has especially caught western societies on the backfoot. Unlike regions more used to infectious disease outbreaks such as Asia and Africa, the likes of Europe and North America have not had to deal with a public health threat of this kind since the Spanish flu disaster of 1918, a four-wave pandemic which is thought to have killed 675,000 people in the USA and 50 million worldwide.

Vaccinations are key to emerging from the worst of the crisis during 2021, both in terms of public health and the economy.

Regarding the latter, COVID-19 has been nothing short of a disaster. America has disproportionately suffered from the coronavirus: Not only does it have the highest registered death toll, but it is also forecast to lose trillions of dollars in revenue.

Predicting the size of the economic fallout is far from straightforward, and estimates vary tremendously.

According to a study by the University of Southern California, anywhere between $3 trillion and $5 trillion could be lost over the next two years, while economists at Harvard believe the pandemic will cost the U.S. $16 trillion, assuming it is over by this fall.

While uncertainty remains as to the exact extent of the financial damage, what cannot be denied is that the financial losses are and will continue to be enormous for years to come.

The second quarter of 2020 saw real gross domestic product in the U.S. decrease at an annual rate of 31.7 percent, the largest quarterly plunge in activity on record.

And one of the most worrying patterns emerging from 2020 is companies struggling to manage cashflows and stay afloat. Payments simply are not flowing through supply chains as they ordinarily would, an observation which is borne out by several reports and surveys.

For example, trade credit insurer Atradius reports in its annual Payment Practices Barometer that businesses across the USA, Canada and Mexico are facing widespread cash and liquidity pressures. Meanwhile, business credit information firm Cortera reported that in May 2020, large companies with more than 500 employees paid their suppliers 15.6 days late on average, up from around 10 days a year earlier.

Responding to economic disruption

So, how can companies safeguard themselves against this sort of financial disruption both now and in the future?

Paying particular attention to cash flow during times of crisis is essential if businesses are to emerge from this black swan event intact–even those that appear to be in strong financial shape, given the longevity of the demand and supply chain disruption being witnessed.

At the start of the pandemic, around March 2020, Deloitte released a series of advice papers on how supply chains can cope with the then anticipated fallout, one of these being “COVID-19: Managing cash flow during a period of crisis.”

“Given the importance of cash flow in times like this, companies should immediately develop a treasury plan for cash management as part of their overall business risk and continuity plans,” the report states. “In doing so, it is essential to take a full ecosystem and end-to-end supply chain perspective, as the approaches you take to manage cash will have implications for not only your business but also for your customers.”

Deloitte draws on lessons learned from the 2003 SARS epidemic, the 2008 global financial crash, and the 2011 Japanese earthquake, offering 15 specific practices and strategies for companies to better manage their cash flow.

15 ways to better manage your cashflow

1. Ensure you have a robust framework for managing supply chain risk.

2. Ensure your own financing remains viable.

3. Focus on the cash-to-cash conversion cycle.

4. Think like a CFO, across the organization.

5. Revisit your variable costs.

6. Revisit capital investment plans.

7. Focus on inventory management.

8. Extend payables, intelligently.

9. Manage and expedite receivables.

10. Consider alternate supply chain financing options.

11. Audit payables and receivables transactions.

12. Understand your business interruption insurance.

13. Consider alternate or non-traditional revenue streams.

14. Convert fixed to variable costs, where possible.

15. Think beyond your four walls.

*Source – Deloitte, “COVID-19: Managing cash flow during a period of crisis”

Among them is advice to extend payables–in other words, take longer to pay suppliers. However, Deloitte warns against delaying payments without prior agreement with customers, urging dialogue between both parties to ensure the supply chain is as minimally disrupted as possible.

Indeed, companies may wish to bring forward payments to suppliers if it prevents them from going out of business, the consequences of which being far costlier than using up some of your own cash reserves early.

As a supplier, offering dynamic discounting solutions for those able to pay more quickly could be a way to improve your cash flows; by using this technique, you are essentially paying customers to provide you with short-term financing. Going down this route could be expensive in the long term, but it could be the only viable option if other financing methods are not available.

Perhaps the most important, albeit least tangible piece of advice is to think outside of the confines of your own business. Rather than simply focus on your own operations, companies should think about how their actions will impact the wider supply chain ecosystem.

A further question revolves around the ways in which payments are being made.

COVID-19 has accelerated the adoption of digital and automated payment methods. For instance, according to research by digital transformation platform MX, there has been a rise in mobile banking engagement of 50 percent since the end of 2019.

The U.S. has been behind the curve on supply chain financing for quite some time. Widescale adoption of electronic, data-driven invoicing will create fluidity and working capital for both suppliers and buyers.

Responding to social disruption

Another dynamic to consider is how to mitigate social disruption.

There is already evidence that the COVID-19 pandemic has rekindled divisions within society–black and ethnic minorities are disproportionately affected by the virus, while the poorest have been hit hardest by the financial costs of lockdown policies.

While not being ostensibly linked to coronavirus, the traction gained by the Black Lives Matter movement in the U.S. has undoubtedly been heightened in the pandemic’s context.

It has also prompted major shifts in consumer and business circles: Citizens and enterprises are putting time and capital towards prioritizing diversity and inclusion.

“Supplier diversity initiatives are no exception,” states supply chain software provider GEP in its 2021 Outlook. “In 2021, procurement and supply chain leaders will need to do more–by developing new approaches to include minority-owned businesses to achieve real targets for supplier diversity.”

Indeed, hardwiring diversity and inclusion into the procure-to-pay process will help organizations respond to the social unrest of 2020. This will involve tracking and benchmarking metrics at a transactional level, and companies can start by focusing on direct spending with small and diverse suppliers.

Going back to Deloitte’s advice on thinking beyond your four walls, businesses should also monitor the revenue growth of their suppliers in order to fully assess the impact of their supplier diversity and inclusion strategies.

Archives, Banking, Global Trade Daily

Here are the Top ERP Transformations That Support Buyers

January 29th, 2021 Matt Mindrum Leave a comment

B2B companies are currently up to their necks in “digital transformation.” They’re moving at a rapid clip to enhance the customer experience through technologies that automate processes, focusing on marketing, sales, and e-commerce. While this was percolating before COVID-19, it’s now encompassing and tied into the overall business strategies for 2021 and beyond. On the back end, ERP providers and their VARs are scrambling to keep up. Maybe, just maybe, it’s time to take a step back and look at this through a different lens.

As recently as last week, software providers such as Infor and SAP, along with industry leaders like MDM and NAW, have all published white papers or held forums on the “what” and “when” of digital transformation elements. Strategy, roadmap, commitment, and continual investment are the keys to staying ahead of the curve. What we have not heard is, “How are my customers going to fund these projects” or “which project has the most immediate of financial impacts to my business” and most importantly, which project has the lightest internal lift, easiest to deliver, and doesn’t require change management to drive adoption from internal customers.

As the brain and central nervous system for a business, ERP systems are very complex and can be challenging to maintain, especially older legacy systems. Most ERP solutions and resellers create additional revenue streams by providing customers with value-added technology, integrations, and professional services. That’s especially true right now when new systems are increasingly harder to sell.

From the buyer perspective, implementing a new ERP is like open-heart surgery. Similarly, new technology projects are feared as a drain on internal resources, and who wants to part with cash in uncertain times? The risk appears too great in the current market climate, while the need to upgrade, enhance, and automate is absolutely paramount. In short, they want an attractive, simplified facelift of functionality to the ERP that improves their agility in virtually serving customers.

The focus is primarily on the external customer and often neglects areas within their customers’ business where change is not perceived as immediately necessary.

As the brain and central nervous system for a business, ERP systems are very complex and can be challenging to maintain, especially legacy systems. Most ERP solutions and resellers create additional revenue streams by providing customers with value-added technology, integrations, and professional services. That’s especially true right now, when new systems are increasingly harder to sell.

The focus is primarily on the external customer and often neglects the business area where change is perceived as immediately necessary.

Supporting their customers’ digital transformation efforts has stretched many ERP companies too thin for them to take on major integrations. If their professional services organizations aren’t already tapped out by working on e-commerce, they’re doing projects such as CPQ (configure, price, quote), mobile order entry, or other customer-facing applications.

Partnerships are a proven strategy for obtaining solutions without having to buy them build them internally. By partnering with industry-leading businesses with a back-end operational focus, ERP providers can offer add-ons that complement their newly digitized front-end processes, deliver them more rapidly, and to a democratized customer base. With that in mind, here are three relatively easy back-office automation plays that ERP providers should consider right now:

1. Order management automation.

Automating order management is a no brainer in the “order to cash process.” As businesses build eComm into their revenue organizations, they still need to accommodate all customers and their preferred transacting business methods. While expanding online order acceptance, any manual processes will consume resources and present error risks for businesses that grandfather in older processes like accepting orders via fax. That said, the result is a smooth and versatile system that speeds up back-office processes without causing undue strain on internal teams.

2. Accounts receivable automation.

Accounts receivable automation pairs well with e-commerce upgrades. Customers may already accept payments online. However, for those who still need to invoice, accounts receivable automation can support efficient workflow creation. Such a move could improve cashflow and shorten DSO (days sales outstanding). However, it may require them to rethink how they submit invoices to their customers: via EDI, paper, PDFs, or CD-ROMs, which, believe it or not, are still in use. AR automation requires standardizing and automating invoice transmission. That could require some change management and internal resources on the part of the ERP provider, working in conjunction with the technology provider to get customers set up.

3. Payment automation.

All businesses are already making payments to suppliers, maybe some of them through an ERP module, but there’s still likely significant manual work involved. Best-of-breed payment automation solutions take four payment modes—check, ACH, card, and wire—and put them into one streamlined interface. When using this type of system, the buyer decides which invoices they want to pay—and they don’t even need to keep track of how each supplier wants to be paid. The payment service provider handles all the supplier enablement, and the software intelligently directs funds to approved suppliers in their preferred method. The concept of payment automation adoption is now over a decade old. In that time, payment automation providers have perfected the implementation process only to take a few weeks and minimal internal effort to get started. That means it can happen concurrently with front-end projects. The time and money saved (and potential rebates earned) by utilizing such a system enables businesses to allocate excess funds for other transformation projects.

Overall, digital transformation acceleration is a positive thing for ERP providers and partners. Their customers, who are in an “innovate or die” situation, are open to more outside-the-box solutions than before and are leaning on their ERP providers as a result. Finding high-tech hi-touch solutions. They have the opportunity to make a mark on their customer’s future success and garner recognition for their work.

At the same time, they have to adopt innovation themselves. Every day, one ERP or another is coming out with a new module or integration. The day of the monolithic tech stack is gone. Customers want to pick and choose what works best for their business. To retain their customers, ERP providers have to connect to as many different solutions as possible.

Right now, the back office is the best focus for improvements. Partner up and offer connected solutions, like automated order management, accounts receivable, and payments. If you’re looking for a place to start, I recommend automating payments first. That type of scenario creates a win-win situation because you create another revenue stream right out of the gate, and your customers generate a profit from something that just used to be a drag on their bottom line. The revenue saved or generated from that initiative can pay forward into other automation options, creating a simplified system that pays your efforts forward.

_____________________________________________________________

Matt Mindrum is VP of Strategic Partnerships with Nvoicepay, a FLEETCOR company. For more than 20 years, Matt has delivered impactful solutions to businesses with a consultative approach on operational efficiency, sales enablement, and strategic partnerships. His expertise spans from low- and mid-market to Fortune 500 companies. He has a strong background in technology, manufacturing, and wholesale distribution.

Archives, Banking, Global Trade Daily

Uncover New Opportunities from a Return on Experience

December 30th, 2020 Derek Halpern Leave a comment

The pandemic, though terrible, has given us much-needed time to pause, reflect, and perhaps make some changes to the way we live our lives. We have a chance to reevaluate what is really important to us. What brings us happiness? What drains our energy? What experiences add meaning to our days? Which ones take it away? We have an opportunity to face this challenge in a way that makes us better people.

Businesses are on a parallel path. With the diminishing of old norms comes the possibility of reimagining our old processes. That has brought about an acceleration of technology adoption across virtually every industry. Still, there’s another storyline emerging as well—the rise of what Heather E. McGowan calls The Human Capital Era. McGowan believes that the workforce has exhibited incredible resilience and creativity during the pandemic. They’re “an asset to develop rather than a cost to contain.”

I’m all for it.

Everyone knows the term “return on investment”—or “ROI”—meaning you get more monetary value out of something than what you put into it. But money is not the only measure of value. As we take stock of our business and personal lives, I think we should re-establish a lesser-recognized concept: return on experience.

Return on experience is significantly more objective than a return on investment since the measurement varies by opinion rather than hard numbers.

For example, we all have gone out to have dinner and found that the bill was more expensive than expected. Maybe the food was just so-so, you had a long wait time, or the server was brusque. Whatever the reason, it just wasn’t a great experience. But you might gladly pay twice as much for dinner where the food is delicious, or the service is kind and attentive. That’s what I think of as return on experience—getting value beyond what money can buy.

We embrace this concept more easily in our personal lives, where there’s less accountability for how we spend our money. For example, pre-COVID, I enjoyed traveling with my wife and two kids. Those trips were expensive, even after accounting for the hotel points and airline miles I’d collected. But the memories will stay with us forever, long after the cost has been absorbed and forgotten.

When you think about your business and your accounts payable team, what is the return on experience from antiquated methods like processing checks? What is the opportunity for growth? One person can’t cut or sign checks much better than another. There’s a limit to the impact you can have by stuffing checks in envelopes every week. It’s the opposite of a good experience.

Incorporating automation in your back office is a good way to tackle ROI and ROE simultaneously. When you have removed mindless tasks from your AP team’s plates, they are free to spend their energy on more interesting, strategic, and valuable tasks. I think that’s an initiative that’s well-aligned with the Human Capital Era.

As we re-examine our lives and our businesses, let’s remember what it means to evaluate something in the first place: to judge or calculate the quality, importance, amount, or value of something. And in that calculation, consider the return on experience in terms of your business, beyond money. It’s about setting yourself and your employees up to live and work in a high-quality environment—one that encourages personal and professional development.

___________________________________________________________________

Archives, Banking, Global Trade Daily, Software

Here are the Top Tips for Preventing ACH Credit Fraud

November 11th, 2020 Josh Cyphers Leave a comment

What can organizations do?

Here are four ways to help reduce your risk of ACH credit fraud.

1. Handle with Care

Let’s say you’ve got a new person in accounts payable who isn’t fully trained yet. This person gets an email from a supplier, asking to update their bank account information.

2. Secure Information

The most sophisticated approach that I’ve seen so far includes a trained procurement team, who verifies and validates all changes that come through.

3. Look at Fees

4. Shift the Risk

____________________________________________________________________

Josh Cyphers is the President of Nvoicepay, a FLEETCOR Company. For the past 20 years, Josh has managed successful growth for a variety of companies, from start-ups to Fortune 100 companies. Prior to Nvoicepay, Josh held leadership roles at Microsoft, Nike, Fiserv, and several growth-stage technology companies. Josh is a lapsed CPA and has a BS in Economics from Eastern Oregon University.

Archives, Banking, Global Trade Daily

Financial Transformation Breakthrough: Are You Starting Too Big?

October 29th, 2020 Lynn Bancroft Leave a comment

In their article on the a16z blog, “The CFO in Crisis Mode: Modern Times Call for New Tools,” Seema Amble and Angela Strange call for a new round of financial technology (fintech) innovation aimed at the corporate finance function. They envision a future in which fintechs deliver intelligent solutions that rely on data capture across the enterprise. They also recommend ways that companies can make better financial decisions. It sounds like a worthy effort. As they point out, today’s CFO is expected to be highly strategic. But does that always have to mean undertaking Transformation with a capital “T?” Right now, it might be better to focus on opportunities for incremental change.

A recent survey of 225 CFOs at global companies found that nearly half have not completed any digital transformations. There are still significant efforts devoted to manual transactions in most finance departments—such as sending payments. Only a relatively small effort is going towards strategy, as Amble and Strange perfectly illustrate with the above image.

It’s not for lack of budget. According to the survey, the two greatest challenges to digital transformation are a lack of technological skills and internal resistance to change. Budget issues were the lowest-rated challenge.

To overcome those challenges, companies create titles like Director of Finance Transformation, Global Finance Digital Transformation, and Senior Program Manager for Finance Transformation. The people in these roles specialize in upgrading their businesses as simply and non-invasively as possible.

The Meaning of Transformation

If you look up synonyms for the word’ transformation,’ they include ‘metamorphosis,’ ‘revolution,’ and ‘radical change.’ The problem is that when people think about introducing new technology to finance this way, they tend to think about solving big problems at the top of the pyramid—for example, their ERP solution. When they’ve exploited that as much as they can, they move down the pyramid. They’re primed for Transformation (with a capital ‘T’) to be massive and arduous and disruptive, that they’ve missed the smaller, transformative opportunities that aren’t nearly as disruptive. I have yet to see a title like Senior Director of Incremental Change on LinkedIn, but maybe there should be. Incremental change is a lot easier, and it can have an outsized impact.

Those opportunities are found at the bottom of the pyramid, where people are mired in small, tedious problems that add up—especially as a company grows and adds headcount. Opportunities here tend not to attract the attention of the Transformation crowd because of their size. They’re not viewed as strategic. Automating payments is one such opportunity at this level, and fintechs are already on it.

There’s a huge amount of manual effort that goes into making payments. It’s not just the writing of checks; it’s enabling suppliers, making supplier data changes, reconciling, and resolving payment errors. Taking advantage of the right fintech software can reduce the effort it takes to maintain these projects—and with just a few hours of IT time.

There’s little or no integration required—all you need is a payment file from your ERP or accounting system to map to. The right fintech partner will do that mapping, as well as most of the project’s heavy lifting.

By adopting this technology, companies go a long way toward shrinking the heavy foundation at the bottom of the pyramid and redirecting that effort toward more strategic initiatives.

Regaining Control

It’s not just about reducing or eliminating manual transactions. It’s also about visibility and control.

Every finance leader is hyper-focused on cash management. Cloud-based payment automation shows you where your liabilities are and simplifies the payment process—one that only requires a few clicks of the mouse. You have full visibility into the entire payment flow, regardless of payment type, at all times. Payment data is consolidated into an electronic format, so it’s easier to present the information to company leadership, FP&A, and auditors.

It’s time to think smaller and start at the bottom of the pyramid. We don’t have to wait for the next wave of fintech innovation. Companies can cut the time and cost of making payments by about 70 percent by chipping away at the pyramid’s lower sections. There are also opportunities to relieve your team from the worry of payment fraud while turning accounts payable into a revenue generator.

Understanding What’s Available

Very few people know about fintech payment automation or really understand what it does for their back-office operations. Market penetration is still in the single digits, and most companies make payments the old-fashioned way—by sending payments directly through their banks.

It’s hard to believe change can be so easy. Perhaps it’s because we associate change with a need for a seven-figure budget, an army and consultants, and a year of dedicated time. But that’s not necessarily the case anymore. If I could sidle up to these Directors of Finance Transformation, I’d ask them: “Are you looking for ways to increase throughput and reduce risk without upending everyone’s current processes? Have I got a project for you.”

__________________________________________________________________

Lynn Bancroft is a Relationship Manager with Nvoicepay and is dedicated to building strong relationships with enterprise customers.

Archives, Banking, Global Trade Daily

LATEST: 2020 is Shifting the B2B Payments Scene

October 2nd, 2020 Josh Cyphers Leave a comment

B2B payments have historically been slow to adapt to automated payments but COVID may be the vehicle to forever change how business payments are processed. Josh Cyphers, President of Nvoicepay, a FLEETCOR company that transforms the way firms pay their suppliers, provides insights into the changes and trends businesses are experiencing in B2B and mobile payments and how it’s impacting businesses moving forward.

What are some of the big trends driving B2B payments?

Paper checks still reign supreme in B2B payments, but COVID has created a compelling event that is really pushing companies toward fully automating payments. This is a big shift. Over the course of the last 10 to 15 years, check use has been ticking down ever so slowly. According to the 2019 AFP Electronic Payments Survey Report, organizations made 42 percent of their supplier payments by check in 2019, down from 81 percent in 2004.

Now that accounts payable departments are working remotely, companies are trying to minimize the amount of manual work that requires trips to the office, or to employee’s homes to get them to sign checks. Suppliers are asking to be paid electronically because they get the money faster and they don’t have to go to the bank. It will be interesting to see the 2020 AFP report and see if the pandemic pushes organizations to finally give up checks.

The other thing that’s happening is an extreme focus on managing cash. Given the economic environment we’re in, a lot of companies are looking for ways to conserve cash. They’re looking at the timing of payments; extending payment terms to suppliers or delaying payments. With an automated solution, all of the payment approvals and workflow are online, and you have visibility into every payment as it moves through the system, and that gives you precision control over cash flow.

What are some innovations you’ve noticed in contactless payments lately?

In B2B payments, I would define contactless as not having to do manual work. Cloud-based software is enabling accounts payable departments to automate work they’ve previously had to do manually. That includes the handling of paper checks but also a lot of the work that goes into electronic payments as they’ve historically been done through banks. For example, if you want to do ACH payments, you have to pick up the phone or send out emails and collect suppliers’ banking information and probably manually key that into a system. For card payments, you have to phone or email to find out who will take a card payment, and then you might have to phone the supplier with the card number, and then they enter it into a terminal. There’s a surprising amount of manual work that has to be done to get the funds to move electronically through the banking system.

The cloud is what is enabling payment automation providers to transform that disjointed process, with all its manual touchpoints, into a single automated workflow.

The cloud also makes implementation very fast and easy, so automating payments is something that an organization can now accomplish in a matter of weeks.

How has COVID impacted mobile payments?

Having a cloud-based solution allows accounts payable professionals to make payments anytime, anywhere. But up until COVID, that kind of mobile capability was a nice to have, not a must-have for business payments. I’ve never in my finance career seen an AP team that was completely remote. With everyone in the office, mobile just wasn’t a consideration. The construction industry is one exception; in that industry, many of the people who approve payments are out in the field, so mobile capabilities are a real selling point for a payment solution. Now that AP teams have been out of the office, every industry is looking for payment solutions that allow them to work remotely as much as possible.

What do you see as the biggest future trend for mobile payments?

B2B payments are about ten times as big as consumer payments, yet the adoption of cloud-based solutions is still in the single digits. Given the size of the market, the adoption of mobile payments by businesses is a big trend in and of itself.

Mobile payments have changed consumer life by making payment so easy and convenient that you hardly have to think about it. That has had a huge impact on how we live our lives and has really sped up commerce and increased our options. When you think about that same kind of frictionless, mobile payment experience becoming widespread in the business world, which it inevitably will, I think it will fuel all kinds of innovation and change.

______________________________________________________________

Josh Cyphers is the President of Nvoicepay, a FLEETCOR Company. For the past 20 years, Josh has managed successful growth for a variety of companies, from start-ups to Fortune 100 companies. Prior to Nvoicepay, Josh held leadership roles at Microsoft, Nike, Fiserv, and several growth-stage technology companies. Josh is a lapsed CPA, and has a BS in Economics from Eastern Oregon University.

Here are the Top Tips for Preventing ACH Credit Fraud

What can organizations do?

1. Handle with Care

2. Secure Information

3. Look at Fees

4. Shift the Risk

There is a better way,

It Speeds up Invoice Approval

It Improves Morale and Accuracy

It Prevents Payments Being Overlooked

It Creates an Additional Source of Usable Data

In Closing: the Importance of Finding the Right Fit

most viewed today