No matter how many ways finance teams try to fight fraud, bad actors always devise new accounts receivable scams. According to the Association for Financial Professionals , 80% of organizations were the victims of payment fraud in 2023, and 30% of those were unsuccessful in recovering the lost funds.
Is it a losing battle? It doesn’t have to be. Even if you can’t stay on top of every new scam that emerges, there are some telltale signs that scams typically have in common.
3 ways to spot the signs of payment fraud
Fraudsters will try to scam payments in several different ways. Checks, for example, are a frequent target. Additionally, your organization may be a target of payment fraud in other ways, such as a fraudster intercepting your customers’ payments or the customers themselves being fraudsters.
- Watch for potential check fraud. You can spot this with out-of-range or duplicate check numbers. You may also want to verify a new bank account or account signer, so you don’t risk accepting a check that will later bounce. You can also encourage customers to make online payments and reduce the risks of check fraud.
- Investigate customer claims that they’ve made payments. If a customer receives a past due notice from you, but says they paid on time, look into how the payment was made. Your customer may have been the victim of a payment scam and made a payment to a fraudster (such as through a fraudulent payment link).
- Verify the authenticity of new customers. Fraudsters may also try to scam you out of goods by placing orders and then submitting fraudulent payments later (such as with a stolen credit card). Put steps in place to verify the identity of your new customers before your company finds itself at a financial loss.
Be on the lookout for email scams
Email scams can compromise your customers—and hurt your business—in a few different ways. Business email compromise (BEC) is a common type of payment scam where a fraudster impersonates a company to trick businesses or consumers into changing their payment information. Your customers think they’ve made a payment when the money has actually gone into the fraudster’s bank account.
Scammers may also try to target your company through a phishing scheme. If someone on the finance team shares sensitive information, it can expose you to a cybercrime that puts your customers at risk.
- Make sure your customers know how to identify emails from your company. This reduces the risk that your customers fall victim to a BEC scam. You can also streamline invoicing your customers through Billtrust’s portal processing , and avoid emailing invoices altogether.
- Make sure your team knows how to identify phishing schemes. These emails often have suspicious links or request “immediate action.”
Keep track of what’s normal to detect unusual activity
One of the best defenses against fraud is to know what “normal” activity looks like for your customers. The sooner you spot something unusual, the sooner you can stop scams from harming your company or customers.
For example, a manufacturing company may notice a sudden increase in orders from a supplier, which could indicate unauthorized activity. The company may also notice excessive chargebacks, indicating that scammers are trying to get goods without paying for them.
Don’t forget about internal controls
While a lot of scams happen externally, you can’t ignore that fraud can happen within the company as well. An employee may create fake invoices so they can divert payments into their own account, or initiate write-offs to cover up theft.
If someone on the finance team suspects another employee of a scam, make sure they know how to report it. You should also look for employees who don’t want to take time off or are unwilling to train others. They might be worried that their scam will be discovered if someone else can access their work. Set up as many dual controls as possible.
Technology can minimize risks
If everyone on the finance team has to keep their eyes on everything, scams may still slip through the cracks. Fraudsters are betting that people simply can’t keep up and still get their daily work done.
Data analytics, AI, and machine learning can spot these patterns and help you better manage your risk. While the best defense in the fight against accounts receivable scams and payment fraud is your own finance team, automation tools can give them the time to identify possible fraud. From spotting anomalies to recognizing customers’ past payment activity, technology can sift through large amounts of data and alert you to issues needing your attention.