The digital race is on and businesses that fail to up their game in terms of digitisation and automation are at risk of being left behind.
This is according to Ryan Mer, CEO, eftsure Africa, a Know Your Payee™ (KYP) platform provider, accelerated by the COVID-19 pandemic, tech innovations used to streamline and add control to slow, manual processes are fast becoming a necessity, not an option.
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Arguably one of the most crucial processes in any business is the onboarding of payees including suppliers and vendors, as this is when new relationships are initiated. This has traditionally been a manual process, which is time-consuming, open to human error and often leads to a poor onboarding experience, which can place your company at a competitive disadvantage thanks to the modern expectation of fast, efficient and smooth business interactions.
Efficiency and accuracy aside, digitising and automating the onboarding process greatly reduce the risk of fraud occurring when signing on new vendors, which is when organisations are most vulnerable to external perpetrators, says Mer.
“Unfortunately, the rise in tech innovation brings with it a rise in cybercrime, and it is better to fight digital threats with digital tools.”
Here are some of the challenges faced during onboarding and how digital onboarding tools can help mitigate them:
New or changed payee account fraud
This particular brand of cybercrime costs the financial services industry billions of dollars each year. The 2022 AFP Payments Fraud and Control Survey reported that 71 percent of organisations were victims of payments fraud attacks or attempts in 2021, with 48 percent of fraud value stemming from accounts that are less than a day old, according to RSA Security.
Interceptions or impersonations of new payee onboardings or requests by fraudsters to change bank account details and then use these bank accounts to perpetrate the fraud are a serious and daily occurrence.
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The risk of financial fraud is huge when accounts payable teams fail to undertake essential activities such as verifying existing accounts.
“When onboarding new vendors or making changes to existing vendor details, verifying bank account data is a critical control that cannot be neglected,” says Mer.
Solution: Automate your KYP. Rather than implementing more procedures and often manual protocols, Mer says it is worth considering a third-party platform to help manage supplier data and automate supplier verification and payment checking, which will not only enhance security but save your company time and increase accuracy by eliminating human inputting and verification methods.
A Software as a Service (SaaS) provider like eftsure independently verifies all required suppliers’ details in automated manner, making current manual processes more efficient and secure.
It digitises and automates key checks and processes that would otherwise be vulnerable to manipulation and provides real-time alerts to any suspect activities to help prevent incorrect payments due to fraud or error, he says.
Vendor master data
Maintaining supplier data integrity is critical, especially when it comes to bank account details. Information that was verified as correct at onboarding will not necessarily be correct further down the line if that information is updated or compromised.
Fraudsters are constantly trying to manipulate staff (especially targeted finance and procurement teams) to update vendor bank account details or add fictitious supplier details. This can be done through Business Email Compromise or email impersonations - both externally and internally.
Added to this, Mer says there is always the risk of people internally changing bank account details or adding fictitious supplier details in the ERP/Vendor Master Data. If these details do land up being successfully compromised, it is very difficult for a company to know until they are alerted by a vendor of non-payment or until someone somehow questions a supplier being paid. Unfortunately, by this point, the funds have flowed and are likely not recoverable.
Solution: Checking integrity of supplier details at the point of payment. An automated solution that independently re-checks payment details prior to payment release can help identify compromised banking details and prevent a fraudulent payment from being released.
A solution such as eftsure’s payment screening technology can help identify compromised vendor banking details with the click of a button, prior to the funds being released. This can be run in various stages of the payment process, from payment file creation to just before payment release.
The screening will also identify if a supplier sitting in the payment batch has not come through proper vendor onboarding, approval and verification processes, thereby identifying a potentially fictitious supplier added to the payment batch, says Mer.
Slow, inefficient processes
He says when demand for faster and easier processes has never been higher, relying on manual onboarding practices can cause your company to lag behind competitors as manual methods are generally slow, with lots of back and forward, negatively affecting the vendor’s onboarding journey.
Then there is also the internal new supplier onboarding approval process, which is often done via email back and forth internally. These practices can also be complex and repetitive tasks for employees, whose time is better spent elsewhere.
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Solution: Automated processes. As onboarding is one of the first experiences a supplier will have with your company, it should ideally be as seamless and simple as possible, advises Mer.
By implementing a platform that can digitise and automate the process, you can speed up the onboarding journey considerably and collect all the information and compliance-related items a business may require upfront, saving time for all parties involved.
A digitised and controlled internal approval process that is automatically part of internal procedures will also be a big win for internal staff who are responsible for this, as well as internal auditors who want to review the transaction trail. This increases business efficiencies and profit margins, as manual labour is greatly reduced, and staff can apply their skills to better things.ma
With organisations looking to go completely digital in the coming years, those that remain on the fence in this regard risk being left behind. Mer says that digitising and automating processes is good for business, good for controls, good for compliance, good for the bottom line and good for customers, and now is the time to consider the positive effects that smarter vendor onboarding can have on your business.
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