Is Your Vendor File a Backdoor to Fraud?

Outdated vendor information might not seem like a big deal, but it can leave you open to fraud and financial headaches. Just like having outdated information in your online accounts can be risky, incomplete or inaccurate vendor data can create vulnerabilities in your financial systems. In this blog, we’ll explore the risks of stale or incomplete vendor files and outline some best practices to protect your business from fraud.

The Dangers of Incomplete Vendor Files

Your vendor file is essentially the gateway to your business relationships. If it’s outdated or incomplete, you might be inadvertently opening a backdoor to fraud. Here’s how:

• Imposter Alert: missing contact details or banking information can make it easier for fraudsters to pose as legitimate vendors and trick you into paying for fake services. 

We’re already talked about the warning signs for fraud, so you know that vendor impersonators are aggressive and in a hurry. But remember, they’re also clueless. They don’t have basic information that they should have to make the requests their making – “change my banking information,” or “reset my username and password.”

But when you don’t have some basic information in your vendor file – primary point of contact, contact phone and email, account number, and more – how can you tell if you’re talking to an imposter or the real thing?

• Double Payments: outdated data can lead to duplicate invoices or payments sent to the wrong accounts. Suddenly, you’re paying twice for the same service and losing valuable resources.

Finance teams are busy, and the invoices never rest. It’s easy to create two vendor instances or create one without the right account numbers. And then it’s even easier to send a second payment before the first one’s even cleared the bank.

No one likes having to deal with double payments. It’s more time you don’t have to undo something you didn’t want to do in the first place. Ensuring you use standard procedures for setting up and maintaining vendor accounts is key to fending off the risk of double payments.

• Shady Business: incomplete vendor information makes it difficult to verify their legitimacy. You might end up partnering with someone who’s more interested in lining their pockets than delivering what you need.

Verifying identity can be another drain on your finance team. Calls and emails are often not returned and pressure from vendors, stakeholders, and even month-end result in finance teams skipping the important steps of completing vendor verification.

Like most things, it’s important not to skip the little things – because they can open you up to the big things. Like fraud.

A Trusted Partner Can Help

The Solution: Outsourcing to a Trusted AP Automation Partner

For organizations seeking the most robust defense against fraud, outsourcing accounts payable payments to a leading payment automation provider is a strategic move. Trusted providers not only streamline payment processes but also take on the responsibility of ongoing vendor management.

Count on a trusted AP automation partner to:

• Be your data detective: by regularly reviewing your vendor information, you can ensure it’s accurate and complete. You’ll get an extra layer of caution when new vendors are added to the system and when existing vendors want to change or update their information.

Be sure to ask your AP automation partner about how and when they review your vendor information.  Make sure they’re reaching out to keep contact information, banking details, and other payment data up to date. Require them to walk you through their fraud protection processes and how they’re proactively protecting you from business email takeovers and other payment fraud.

• Double lock everything: your automation partner should require multi-factor authentication for you, your team, and your vendors to access account and payment details. The best partners will be PCI-compliant, ensuring they have the right processes, tools, and technology to keep you and your payments safe.

Be sure you ask your AP automation provider for the results of their latest PCI audit.

Conclusion

By taking these steps, you can build a secure and reliable vendor system that keeps your finances protected. Remember, vigilance and good data management are essential in today’s digital world. So, take control of your vendor information and enjoy the peace of mind that comes with knowing your finances are safe!