B2B Payments

Corporate Spend Culture Shows The Limits Of Data Analytics

Spend control isn’t easy — just ask Google and Facebook, which confirmed in 2017 they were among the corporate victims of a widespread phishing attack that tricked businesses into paying fake invoices.

The scam wasn’t a one-off job, either. Fortune reports the fraudster, who pleaded guilty to the crime last month, was able to steal company funds from a range of businesses over the course of two years. While the case sheds light on the ongoing threat of the business email compromise and other invoice scams, it also revealed how even the largest, most tech-savvy companies of the world can fall far, far short on their spend management processes.

Kenneth Loi, co-founder and chief customer officer of Procurify, pointed to a BoingBoing article about the incident that identified the problem.

“Apparently,” the article stated, “no one checked first to see if these corresponded to invoices/POs that had been issued within the companies.”

In the world of procurement spend management, data is undoubtedly key. But as Loi explained to PYMNTS in a recent interview, gaining visibility into company spend is about far more than collecting the data on purchases retroactively and analyzing it. In the case of Google and Facebook, the three-way-match between invoices, purchase orders and payments could have alerted employees to the fraud before any money ever changed hands. However, it’s not uncommon for firms to lack these internal controls.

From our end, said Loi, we’ve seen a lot of different horror stories … such as double invoicing, fake invoices, or paying invoices where you know the item never actually got delivered. These horror stories are all risks that companies face when they don’t have the controls in place.

The three-way match and other processes like delivery authentication — a capability that enables a business to ensure that products have actually been received before invoices are paid — can address mistakes and cases of fraud, but it’s only the tip of the iceberg in terms of strategies corporates must implement to manage spend.

Some are more concrete, like the integration of accounts payable systems into ERP platforms to collect spend data, or connectivity between departments via communication platforms like Slack to promote collaboration and information sharing. Using technology to capture and share information is essential to gaining visibility into money leaving the enterprise, and potentially preventing payments that shouldn’t be made.

Payment Culture

As Loi noted, however, there are less concrete strategies organizations must consider as well. Perhaps the most important is to identify and assess the firm’s unique spend culture, as he described it.

Just like every person has a unique set of values and beliefs influencing how they choose to spend, manage and invest their own money, each business also has a distinct spend culture that impacts its operations, he said, adding that every company has such a spend culture, whether intentional or not. Understanding your company’s spend culture will allow you to make conscious efforts to influence and guide it, gaining greater control over how the company vision is executed on the ground floor.

The sweet spot of spend management is to enable employees to make their own decisions about spend, and trust that those professionals are familiar and aligned with an understandable corporate spend policy. There must be a common understanding across the enterprise about how a firm wants to spend its funds, Loi said, and the technologies in place need to support that balance of seamless spending and control maintenance.

Unfortunately, too often companies are operating with outdated technologies (or none at all), fail to clearly define a spend policy, have overbearing processes too cumbersome for employees to comply with, or lack the ability to hold employees accountable.

Shifting Spend Cultures

Loi pointed to the growing population of younger professionals, as well as a shifting professional landscape that gave rise to gig and remote workers, as two trends having a major impact on corporate spend cultures.

We’re seeing a large shift of organizations also becoming more friendly to virtual and remote workers, he said. It’s unrealistic to expect that technology will not be part of this shift when it comes to the procure-to-pay side of things.

As organizations begin to understand and shape their own spend cultures, the technologies they have in place have to adhere to changes in how, where and why employees make purchases on behalf of the organization. The mobile device is a particularly critical piece of technology, said Loi, yet the procure-to-pay and spend analysis space has struggled to address demand for robust, mobile-friendly solutions.

Automated approval routing, electronic payments and a focus on the end-user’s own role within the organization will also be important functions for spend management solutions moving forward. Promoting communication between departments, clarity in spend policy, and, of course, the flow of data between systems and people, are also all key to spend management — and to the broader puzzle of managing an organization’s spend culture.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.