CFO

How AP Teams Can Protect Independent Contractor Payouts From Fraud

For language-services providers, working with a wide network of translators isn’t without its challenges. Invoices too often get duplicated and take a bite out of corporate budgets, says Toni Tornell, controller at United Language Group. In the latest CFO’s Guide To Digitizing B2B Payments Report, Tornell discusses how embracing integrated enterprise resource planning (ERP) platforms with automated invoice review features helps companies safeguard their bottom lines.

The global language services market was valued at $46.9 billion in 2019 and businesses seeking to claim a bigger share of it must have the right payment tools on hand. Translation companies must smoothly and securely deliver payouts to thousands of freelance linguists around the world, for example, and supply the preferred currency and payment method for each. Fraudsters may attempt to take control of these transaction flows and divert funds, however, and the COVID-19 pandemic has encouraged many criminals to redouble their efforts to trick accounts payable (AP) departments and make off with money. 

Clear, standardized protocols and workflows — and the software systems that underpin them — can help AP teams keep independent contractors paid and fraudsters frustrated, according to Toni Tornell, controller at translation services provider United Language Group. Tornell recently spoke to PYMNTS about how AP automation tools and policies can bolster companies’ efforts to prevent targeted crime and human errors from disrupting independent contractor payouts. 

Catching New Invoice Fraud

Bad actors have put their business email compromise (BEC) schemes into overdrive during the pandemic, seeking to manipulate staff members who are adjusting to remote work operations. Tornell said she and her team frequently receive fraudulent messages purporting to be from top executives and instructing the AP staff to quickly pay off invoices. These messages may be missing critical details, however, such as the intended recipients’ tax ID numbers or other elements. 

“I personally get emails all the time that look like they’re coming from executives — and they’re not — asking me to process an invoice immediately and [saying] they’ll get me details later. But I know that’s not our policy,” Tornell said. “No one will ever say, ‘Process this immediately, and I’ll get you the details later.’ The only people who are doing that are fraudsters.” 

Criminals using such scams manufacture a sense of urgency to trick staff into acting without thinking. Warding off such attacks requires AP departments to institute clear rules prohibiting staff from initiating payments until complete details have been provided and transactions have received the appropriate sign-offs, Tornell said. Having strong supporting policies and procedures can help cut through the confusion of the moment. 

Securely Paying Existing Vendors 

A similarly careful approach has been important to detecting another form of BEC in which fraudsters masquerade as vendors who are already in companies’ systems. Criminals use this pretense to ask for banking details to be updated in the company’s systems with their own. ULG has fought such attacks by requiring staff to confirm any payment detail change requests directly with vendors through separate, live channels such as calling them rather than replying to the potentially fraudulent emails. 

Deliberate fraud is only one factor that can misappropriate payouts, however. Companies may also be wise to implement systems that reduce opportunities for human error. ULG took such an approach by adopting a digital AP platform that features a vendor portal in which language professionals can enter and confirm their payment method preferences and transaction information. The platform enabled ULG to abandon its previous practice of having AP staff take down details over the phone, which ran the risk of payment information being misheard or misspelled as employees manually keyed it in.

Invoice Accuracy

Invoice issues can challenge businesses, which must be able to detect if vendors accidentally or deliberately submitted duplicate copies of documents. Failure to catch such problems could lead to expensive overpayments. ULG adopted an enterprise resource planning (ERP) system that both prevents vendors from uploading copies of invoices they have already submitted and keeps internal staff from entering duplicates. 

“With our new ERP system ... we have controls in place to prevent duplicate vendor invoices from being entered in our system,” Tornell said. 

The ERP system also compares invoices against the purchase orders it had generated. Those that match exactly can be paid whereas those with discrepancies are flagged for further review and approval. Handling approval processes through an ERP system rather than back-and-forth emails can also help streamline the process, she said. 

Accurately and securely handling a high volume of independent contractor invoices and payouts is critical to the growth plans of international businesses like language services providers. The rising rates of fraud attempts make this work challenging, but automated systems and clear policies and procedures can help minimize confusion and stamp out schemes.

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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