The pandemic has triggered a surge in B2B fraud, with bad actors taking advantage of the crisis to target companies while their defenses are down. Professionals around the globe began working from home at the pandemic’s onset, with many using their home networks and personal devices to conduct business. This left many professionals struggling to rebuild their cybersecurity infrastructures from scratch and scrambling to figure out how to protect their organizations’ data while accessing it via their personal systems.
Many companies’ cybersecurity defenses were therefore at their most vulnerable just when they needed them to be in top form. Ransomware attacks focused on businesses surged by nearly 435 percent in 2020, for example, with a large portion of that increase being driven by targeted attacks on remote workers.
This month’s Deep Dive examines how the pandemic has pushed businesses into an uphill battle against B2B fraud. It also assesses how merchants can tap automated B2B solutions to overcome the mounting cybersecurity risks of a decentralized workforce while enhancing their long-term payments efficiency.
Quantifying The Risk Of B2B Fraud
U.S. companies not only experienced 200 percent more business email compromise fraud attempts in mid-2020 than they did in 2019, but they also reported that the bad actors perpetrating these attacks were targeting greater dollar amounts via wire fraud or redirected vendor payments. Businesses are well aware of the heightened risks of B2B theft and fraud and the impact it can have on their financial stability. Protecting their operations from fraud is among the most pressing challenges firms expect to face in 2021, with 59 percent citing it as one of their key concerns.
Many businesses have also learned about these risks the hard way. Fifty-two percent of companies reported experiencing more instances of B2B fraud in 2020 than they did in 2019, in fact, with accounts payable (AP) operations being among the areas most susceptible to security breaches. These surging fraud attempts cost global businesses $42 billion in funds in 2020 as of November of last year, underscoring the financial imperative of enhancing B2B security operations.
Many businesses are therefore eager to invest in innovations that can assist them in the fight against fraud. Compliance and security-enhancing technologies are poised to become two of the top five most common areas in which businesses invest this year, with 22 percent and 23 percent of all businesses planning to invest in compliance and security innovations, respectively. The only question is which types of innovations they are tapping to help them enhance their B2B security defenses.
The Holistic Benefits Of B2B Automation
Many businesses are turning to automated accounts receivable (AR) and AP solutions to boost their defenses amid the new normal of remote work. Firms often approach automation as a multifaceted process, reducing their use of legacy B2B payments (like paper checks and wire transfers), increasing their usage of digital B2B payment methods (like virtual cards) and then automating those digital transactions via integrated enterprise resource planning (ERP) systems.
The chief benefit of such digital solutions is the data they can gather and manage at scale. Digitizing B2B payments data and managing it via ERP systems enables businesses to more accurately process far greater payments volumes than would be possible when using checks or even ACH transfers, all while requiring fewer resources. This same data can also be analyzed and used to automate B2B firms’ security practices using algorithm-based fraud detection, which can enable businesses to spot fraudulent transactions with greater accuracy than manual techniques.
Digitizing B2B payments in this fashion provides a multitude of operational benefits that extend well beyond enhanced payment security. PYMNTS’ research has found that 62 percent of firms that have adopted automated AR processes have benefited from reduced days sales outstanding (DSO) while 49 percent reported lower overall delinquency rates. Seventy-two percent of businesses that have automated their AR processes cite reduced costs as one of the ways in which such investments have enhanced their operational efficiencies.
It is clear that B2B automation can serve as a powerful tool to help businesses future-proof their payments operations. Leveraging cloud-based ERP tools, in particular, can serve to make their payments faster, safer and more efficient while also supporting an increasingly remote workforce.