Financial departments: how to thwart transfer fraud?

PARTNER ARTICLE - Discover how to fight money transfer fraud with Trustpair

Published on February 9, 2022
Reading time: 3 min

Fraud and identity theft, bank rejections and payment errors: given the numerous risks linked to payments, financial departments must more than ever control and secure all their processes, from the beginning of the business relationship with a third party to the payment of their invoices. How to secure payment processes in the context of financial risks and how Trustpair can help you? Here are some explanations.

Third-party verification: a challenge for financial departments

Ensuring a smooth payment process is a priority for companies. Indeed, from the beginning to the end of the business relationship with a third party, finance teams must perform several checks and verifications in order to guarantee the reliability of the data at their disposal:

Does the company exist and is it in good financial health?
Does the bank account exist and does it belong to the company?
Has the third party not changed its situation or bank account in the meantime?

While each of these steps may seem trivial, they are actually more complex than they appear.  

A difficulty in controlling the data associated with the third party

Today, bank accounts are anonymous: no check is made by the bank processing the transfer between the account number and the name associated in the transfer order. 

Only regulatory checks performed by the company throughout the business relationship confirm that a bank account belongs to the supplier the company wishes to pay. 

Manual, fallible and time-consuming third-party checks

In order to verify the reliability of a third party's banking data and information, companies implement several anti-fraud measures:

  • 82% perform a check when updating a third party, and 75% at the beginning of the business relationship,
  • Double signature and counter-call are the actions taken in 78% and 66% of cases respectively.

But today, these methods are no longer a sufficiently effective barrier to guarantee the security of payment processes. Not only because the controls are performed manually, which makes them fallible and time-consuming, but also because the third-party data in the database evolves and degrades over time. 

Considering the cumbersome nature of the check processes - on average 30 minutes for a third party - a human error or failure to check exposes the company to numerous risks.

 A multitude of risks associated with payments

A company that does not have full control over the data associated with its third parties and that does not have good visibility of the status of the data in its database is exposed to risks that can cause serious financial or operational damage.

Companies prey to fraud attempts

 With 1 in 2 companies being victims of fraud in 2020 and an estimated 1.4 billion dollars in losses in France, the fight against transfer fraud is a priority issue for 89% of financial departments in 2021.

 Although several fraud techniques exist, the aim is always the same: the money is paid into a bank account that does not belong to the third party. We speak then of :

  • President fraud: the fraudster usurps the identity of a senior executive or employee, and requests, with flattery or threats, a transfer that he presents as "urgent" and "confidential",
  • Fake supplier fraud: the fraudster usurps the identity of a third party known to the company, and tries to obtain a payment in his name by requesting the addition or modification of bank details,
  • Internal fraud,
  • Phishing, which has increased by 700% since the beginning of the crisis.

Payment delays, rejections and errors

Beyond the threat of fraud, payment errors are also a risk for the company. The reasons for these errors can be multiple, and are most often due to a lack of attention or poor handling. There are several cases: 

  • Recipient error: the most common error often due to poor handling where the originator swaps the legitimate beneficiary with another registered beneficiary,
  • Bank details error: in this case, the transfer order will be automatically rejected,
  • Double transfer: payment made twice, instead of once,
  • Error in the amount of the transfer.

However, payment errors are also directly linked to the quality of the data in the database. If the database contains errors or anomalies, this will have an impact on the payment process by causing payment errors or rejections, thus increasing the time required. 

Checking the identity of third parties ensures a smooth and secure payment process, which allows financial departments to avoid the risk of transfer fraud and errors.

Trustpair helps you fight credit transfer fraud 

The key to protecting your company from credit transfer fraud and securing your payment processes from A to Z lies in the control of supplier data throughout the entire Procure-to-Pay process, from data entry in the third-party repository to payment validation. 

Trustpair supports you in your third-party bank details reliability projects throughout the business relationship.

By multiplying the control points throughout the payment chain, financial teams are assured of always paying the right third party to the right bank account, and are able to

Automatically check your third-party bank details
Control the data in your third-party repository in real time
Be alerted in case of errors or anomalies detected in the third party database
Ensure the security of all your payments

The third-party data you work with is constantly updated, which allows you to prevent errors or payment rejections, and to protect your company from the risks of fraud.

Have a question? A project? Talk to the Trustpair experts.

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