0000002275 00000 n Do not call a new phone number to verify changes; you may be talking to the fraudster. If the fraud attempt is successful, any future payments will be misdirected to an account controlled by the criminals. This information should never be transmitted via email,which is extremely unsafe. Collect Form W-9 from all vendors, not just those you believe are reportable. The rush to pay suppliers electronically in the new remote environment exposed them to various fraud schemes, targeting ACH payments. This scourge has cost companies millions and, in a few instances, individuals their jobs. 0000022331 00000 n Preventing business email compromise requires a comprehensive and organization-wide commitment to strong payment controls. Train and empower accounts payable and vendor staff to routinely ask questions of both vendors and department staff. If you choose this option, consider requesting a SSAE 16 system audit report from the provider. When storing supplier banking information in an ERP system, ensure access is tightly controlled through strict permissions workflows and frequent audits of current user activity.. 2020 was an eventful year for business payments. When you do, you will have a single source for the truth about your vendorsand one that is highly controlled and automatically vetted before anyone gets paid. Do not make the payment until you have a match. You need other control methods if you want to reduce your risks. Use a company phone directory to confirm the phone number, and never use email or contact information included in an email signature. (If the government or vendor has been recently hacked, an e-mail response will likely go to the fraudster rather than the vendor.). Control Corporate Card spend inside Stampli. This includes new procedures to verify data, both when it initially is entered and andy time it is updated. 0000001635 00000 n 0000022848 00000 n J.P. Morgan isnt responsible for (and doesnt provide) any products, services or content at this third-party site or app, except for products and services that explicitly carry the J.P. Morgan name. These attacks have become so commonplace that in 2021, 71% of finance professionals said their companies were targets of payments fraud.2. The cost for not employing the first one could run to the millions so if you havent already incorporated it into your processes, you should do so without delay. Consider implementing multiple approval levels based on thresholds such as dollar amounts or employee tenure. Do fraud detection solutions make a difference? 0000021444 00000 n This opens the door for those looking to take advantage of the company. With the pace of change and new security threats upon us,focus on worse-case scenarios may leave you feeling helpless and overwhelmed. minority business reporting, conflict mineral reporting etc.). Coordinate with your information technology team to establish and maintain up-to-date system security and e-mail spam filters. Remove vendor change forms from your governments website. Additionally, GFOA recommends that governments review all control procedures to ensure that they are current and relevant to current threats. Any changes made after the initial registration can be accomplished only by someone with the suppliers login and password. Review every email address carefully to ensure the message is actually coming from within your organization or known vendor. Focus on Patterns and Common Fraud Attributes. 0000007644 00000 n The risks are simply too great to ignore. Safety comes first. 0000020904 00000 n Incorporate this process into your daily pre-check run process. Improve your working capital, reduce fraud and minimize the impact of unexpected disruptions with our treasury solutionsfrom digital portals to integrated payables and receivablesall designed to make your operations smoother and more efficient. Provide the paperwork for vendor changes to the manager, along with a system report. Treat irregularities such as first-time beneficiaries, urgent requests and cross-border payments with extra caution. Do not make any changes to vendor information, particularly payment addresses and/or bank account information, without carefully reviewing the information provided and corroborating it through other sources. hb`````=`P ",l@l0 &GyI^:-l%PZZX p2 i5 N`b` gd 5AAd,|Xd681(`{`XpDb`. Additionally, employees who approve vendor information should be separate from those who actually pay the invoice. If you are aware of fraudulent account routing and numbers, notify your bank and law enforcement. Investigate applicable insurance policy coverage to understand which types of risks are covered. 0000021366 00000 n Have clear payment fraud management procedures for addressing each potential issue in a timely and effective way. 3. Make sure that staff and outside departments understand the importance of prioritizing outstanding balance inquiries from vendors and resolving them quickly, following up on questions via telephone instead of e-mail. 0000000016 00000 n 0000009431 00000 n Discrepancies are flagged and must be resolved before registration can proceed. While ACH fraud was already on the rise,cybercriminals exploited the pandemicand the rapid shift away from paper check with greater voracity than ever. Every company should review their internal controls to address payment fraud risks, particularly when it comes to vendor payment information. According to data from ACFEs Report to the Nation 2020, the answer is an emphatic yes. 0000005507 00000 n JPMorgan Chase Bank, N.A. 8. Were continually investing in our capabilities to fight fraud directed against our firm and the clients we do business with. When using systems that provide online tools vendors can use to update their own information, require that they use strong passwords, and consider the verification strategies listed above to confirm all changes. But change requests are also the most common avenue for fraud, specifically VEC (Vendor Email Compromise). They can identify aged open service POs that contain outstanding balances, submit a bank account change and then submit fraudulent invoices against the PO for amounts below standard matching tolerances. Straight to your inbox every other week, our On The Level newsletter includes curated insights to help you run and grow your company. 0000007175 00000 n Member FDIC. 0 0000018963 00000 n 0000021915 00000 n The PO, which was meant to control spending and prevent fraud, provides an easy path for fraudulent transactions to slip through. startxref 4. Payment questions need to be addressed as quickly as possible because they may uncover vendor or payment fraud. Sign up to receive Analyst Reports, Webinars & more Procure-to-Pay Content. 0000003069 00000 n 212 0 obj <> endobj Angela Anastasakis is the SVP of Operations and Customer Success for Nvoicepay, a FLEETCOR Company. Emails containing late or sudden changes in payment instructions, poor grammar or spelling and unusual urgency about sending the payment should immediately raise your suspicions. Best of all, some of these portals can also do IRS TIN Matching, handle OFAC checking and collect data for other regulatory compliance issues (i.e. Though accounts payable teams have always had to contend with fraud, todays scams seem to be more sophisticated and more costly than ever before. 0000014300 00000 n Dont do it. Do not give out vendor information over the phone. In this role she manages vendor risk engagements, educates clients on third-party risk, evaluates vendor data, and provides recommendations in support of client fraud risk and compliance initiatives. Restrict the use of free-form payments by saving all trusted beneficiaries as templates and establish internal controls that govern how changes are made to account information. Close Stale POs and Vendor Master Records. Similarly, insiders can take advantage of stale accounts. Typically insiders are involved in these phantom vendor schemes and will personally approve purchase orders, vendor master changes and payments. Meet with one of our AP experts. Furthermore, you can use the knowledge gained from each escalation to inform and modify procedures. According to the Association for Certified Fraud Examiners (ACFE) 2020 Report to the Nations, the typical company will lose 5 percent of annual revenues to fraud. No matter who is purporting to send the email, its important to check the message for content that raises red flags. Only follow up by phone with a known contact. If this data is intercepted, it gives fraudsters fuel to make their schemes more credible. <<76134FC30AA53048A3F8490405CEA8B9>]/Prev 881721/XRefStm 1455>> Due to the advances, both in technology and unfortunately fraud, there are some new best practices every organization should be using. 7. 212 42 Watch out for email impersonators who attempt to pose as: Impersonators might assume the identity of someone with internal authoritysuch as a senior employee or executiveto make urgent payment requests that they hope will receive little pushback. 0000002982 00000 n In this type of attack, criminals hack into supplier systems, monitor invoice flow, identify a potential weak spot among the suppliers customers and then reach out to someone in accounts payable to request a bank account update. 0000021701 00000 n Properly verifying all payment requests and changes in instructions can help you recognize and reduce issues related to deceptive communications. 2022 JPMorgan Chase & Co. All rights reserved. It is not to be interpreted as GFOA sanctioning the underlying activity that gives rise to the exposure. Access to master vendor files for purposes of adding new vendors or updating existing data should be extremely limited. Compare Supplier Information to Employee Records. Again, insist that staff use telephones, faxes, or the postal service for correspondence rather than e-mail to address issues with vendors. Adopt the right technologies. Direct deposit eliminates manual touchpoints and gives you a secure transmission path directly from your company bank account to that of your supplier. The self-service vendor portals help accounts payable deal with many issues. Read and learn from multiple sources. These outreach attempts may be a smishing or vishing schemei.e., when a fraudster uses text (SMS), phone calls or voice mails. 0000013114 00000 n Have the vendors contact government staff directly for forms. If you want to learn more about the fraud prevention solutions, tools and technology we have in place, you can: Contact your banking relationship team if you have further questions. According to our internal data, these requests are common, with suppliers changing bank accounts roughly every four years. Dont give information to incoming callers. At Nvoicepay, Angela has been instrumental in leading Operations through rapid growth, while maintaining their 98% support satisfaction rating through outstanding service. GFOA recommends that governments put safeguards and internal controls in place to mitigate the risk of fraudulent vendor payment activity. 0000022194 00000 n 0000010728 00000 n Some now take this step as part of their new vendor setup process. Run vendor address against addresses in the HR file. When confirming changes, provide staff with a script to use and always ask vendors to identify both old and new account information. Having a second set of eyes review information before a large payment is released simply makes good business sense. Setting payment limits at the account and employee levels can help fortify payment processing fraud prevention controls. Correct mismatches from IRS TIN Matching and rerun the data before the first payment is made. There is no single solution to safeguarding against fraud. Fortunately there are alternatives. We saw expansive leaps in digitization, accompanied by new challenges. How do you verify and track the change to ensure you arent being scammed? Always call the requesting entity at a known telephone numberthis includes calling internal executives that appear to be sending payment instructions. CPAPA is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. %PDF-1.4 % Its not just during the supplier enablement process that this information needs to be protected. Vendor master file, if handled properly can help with lots of accounts payable responsibilities. This is another area where fraud detection software really shines. Today, the master vendor file is recognized as a critical feature in an organizations fight to protect itself against fraud and erroneous payments. It looks like youre using an ad blocker that may prevent our website from working properly. Some strategies to help mitigate risk are listed below. Knowing the increased risk with ACH payments is critical when you receive requests to change bank account information. For example, they may use XYZcornpany.com as a look-alike domain for XYZcompany.com. Investigate all matches as some may be legitimate. Before releasing payments, use an auditing tool to compare recent vendor account changes with check registers for a given check run. Use this review process as a training tool to make your vendor staff more aware of risk. Clients have experienced millions in losses due to the lack of a proper callback; once a payment has been released, you are obligated to pay it and there are no guarantees that funds will ever be recovered. Is the paperwork provided what youd expect to see from a large vendor with many business transactions? Consider the options provided by third parties, such as using a bank to manage and store vendor account and other sensitive information. Instead its best to take an integrated approach and to do lots of things well. Institute regular screening for inactive POs and vendor records and close them as soon as possible. According to the2020 AFP Payments and Fraud Control Survey Report,BEC schemes were the most common type of fraud attack last year, with 75 percent of organizations experiencing an attack and 54 percent reporting financial losses. This blog was written by the founder of AP Now, Mary S. Schaeffer. These trends in fraud underscore the importance of robust payment controls. Look back to uncover fraud that might already be embedded, and look forward to halt potential new scams before they can take hold. 5. They may already be involved in a related investigation and might be able to help. Click the links below for secure access to your accounts: Aerospace, Defense and Government Services. How many times does your accounts payable team get phone calls or email messages asking you to change a bank account number, payment address or a point of contact? In this piece we review best practices, look at new ones and identify common vendor validation practices. Fraud can also enter your business on the payment side of procure to pay. In addition to the routing, account numbers, and other remittance information, you may want to add security questions or other uniquely identifying information. First, you can continuously and proactively monitor your procure-to-pay systems to prevent losses before a payment is disbursed. AP teams stay vigilant when they receive requests to change banking information. Use a naming convention for entering all data. 0000020780 00000 n Data from the Kroll Global Fraud & Risk Report for 2019-2020 shows that 28 percent of companies globally fell victim to fraud by external parties, and 27 percent fell victim to fraud by internal parties. Remote work forced accounts payable departments to pay more suppliers electronically, primarily by ACH or direct deposit. Certified fraud examiners know there are distinct patterns and attributes that can signal a fraud scheme is lurking. Today you can adopt sophisticated fraud detection software that will compare employee records against your vendor master to spot any overlap. 0000025075 00000 n 0000021839 00000 n The vendor should provide the information without assistance. xref These schemes often involve multiple hacks and may attempt to compromise vendor information, along with e-mail or other forms of identification, in an attempt to disguise the fraudulent activity. She has more than 30 years of leadership experience in operations and product support. Most companies adopting e-invoicing do so in lock step with an automated clearing house (ACH) or other electronic payment initiative. To receive the best experience possible, please make sure any blockers are switched off and refresh the page. Contact your broker/dealer for additional information and procure supplemental coverage if needed. 0000855480 00000 n Make sure your team is well trained, so alarm bells go off in that scenario. For example; a vendor may change bank accounts, but is it also likely to request changes to its street address, contact, and e-mail address at the same time? Use a Supplier Portal for Change Control and Risk Management. Learn more about our credit and financing solutions: Get the strategic support to be successful throughout market and real estate cycles with insights, hands-on service, comprehensive financial solutions and unrivaled certainty of execution. J.P. Morgans website and/or mobile terms, privacy and security policies dont apply to the site or app you're about to visit. Aiesha is also a Certified Fraud Examiner (CFE). One way to combat these phishing attacks is to have alerts in your email software that flag any email sent from outside your company. Again, this is well-intentionedthe aim is to make it easier for the customer to pay them, but its also risky. In many cases, companies began making ACH payments before they could adequately secure remote networks and environments and without new protocols and procedures to ensure the secure handling of supplier bank account information. Aiesha holds a BA in Accounting from Savannah State University and a BA in Management Information Systems from Saint Leo University. If you are using a third-party, Vendor Legal Name and Tax ID validated against Internal Revenue Service (IRS) Records at, www.irs.gov/tax-professionals/taxpayer-identification-number-tin-matching, Vendor Legal Name and Tax ID validated against Internal Revenue Service (IRS) Records for Exempt Organizations at, www.canadapost.ca/cpc/en/business/ecommerce/enhance/verify-addresses.page, Vendor Legal Name against Specially Designated Nationals List (SDN) and Blocked Persons List from the Office of Foreign Assets Control (OFAC) at, www.treasury.gov/about/organizational-structure/offices/Pages/Office-of-Foreign-Assets-Control.aspx, Vendor Value Added Tax (VAT) Number against VAT Information Exchange System at, Vendor Management File: Best Practices and Validations. 2022 Government Finance Officers Association of the United States and Canada, Alliance for Excellence in School Budgeting, Accounting, Auditing, & Financial Reporting, Employment Resources for Finance Officers, Imposed Fee and Fine Use by Local Governments, Accounting, Auditing and Financial Reporting, Intergovernmental Relations and Federal Fiscal Policy, Public Employee Pension and Benefits Administration, Tax-Exempt Financing and the Municipal Bond Market. You can also perform a retroactive audit to uncover and halt fraudulent activity you might have overlooked in the past. The importance of the master vendor file and having good reliable data in it was highlighted with the surge of Please-Change-My-Bank-Account-Number frauds in recent years. With electronic payments, check tampering becomes a thing of the past. 1. Preparation is key to successfully managing change. When employees are involved, the median loss is $150,000. 0000008115 00000 n Examples include high-risk addresses and countries, consecutive invoice numbers, small first invoices to test the waters, and use of private mailboxes that mask the absence of a physical business address. Information entered into master vendor files should be included on a form (for both new vendors and updates of existing information) that is completed by one person and approved or reviewed by a second. But real success means understanding the local markets you servewhich is why we bring the business solutions, insights and market perspective you need. The self-service vendor portals help accounts payable deal with many issues. Theres a lot of naivete surrounding the notion of business email compromise, or BEC. The importance of callback and validations processes cannot be stressed enough. We use cookies on this site to enhance your user experience. One large retailer using detection software for a retroactive analysis found about 40 fraudulent vendors who had scammed the company for tens of millions in revenue before they were discovered. It is clear that codes of conduct and whistle-blower hotlines simply arent enough. 0000006695 00000 n 0000003607 00000 n Reconcile all payment activity daily to enable immediate identification of suspicious items. A fraudster may have this information and use it to complete your form, but any additional information you request creates another barrier to keep him or her from getting through your internal controls. IT departments need to secure company networks and environments. 253 0 obj <>stream Beware of any vendor form changes that ask for revisions to more than one item in its account.

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