Fraud and securing payments

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Fraud and securing payments

A new article based on the discussion between David Brault, Managing Partner of Objectif CASH, and Clément Letourneux, CFO and former Director of Cash Flow and Financing.

This time, they’re talking about payment fraud: who is ultimately responsible? How can we protect ourselves from fraud? What resources should the treasurer adopt in order to secure payments?

Conférence DAF Trésorier ACA

Fraud and non-compliant payments: whose fault is it?

  • The treasurer on the front line

Clément Letourneux : ‘The top target of fraud is payment methods with cash flows. As such, it’s true that the treasurer is on the front line. The treasurer’s first response should be to acquire a banking communication tool so that they know their position, can monitor it, and get daily alerts. Ideally, the tool should handle the signature aspect of payments and centralise it, especially when cash flow is tight. The treasurer should know at all times what’s going out in payments, what has been approved, by who, etc.’

  • Striking a balance between security and efficiency

Clément Letourneux  : ‘In my career, I have always tried to implement cash flow software and revise the signature policy. You have to strike the right balance between efficiency and security.

Depending on the size of the company, that means choosing the “right” number of signatures without bogging down the system and deciding whether or not signatures should be centralised.  While the goal is indeed to secure payments to prevent fraud, that doesn’t mean you have to lose efficiency in your daily work.

Finally, to add value for the company, a cash flow management tool should be scalable. You should be able to first deploy it at the central office and then plan to deploy it at BUs later according to how the company grows. In any case, it should be done in stages. You should know your balances and, ideally, capture your cash flows automatically in the software by type or by budget code so that you can feed the data automatically into cash flow projections.’

How can we prevent payment fraud?

Clément Letourneux : ‘In my 20 years of experience, I have seen numerous fraud attempts. I would say that it is essential to circulate information so that it works like a swarm of insects (e.g. info on the “fake president” fraud, etc.). This raises awareness among your teams and alerts all employees. Next, a good banking communication program should help prevent payment fraud. Again, the more you anticipate and look out for information issued by banks and for upcoming standards and protocols, the more capable your company will be of protecting itself…

To conclude, I’d like to add that the issues of traceability and security of payments are not only relevant to fraud prevention. These are also issues of compliance, which is an important part of the treasurer’s duties (Sarbanes-Oxley Act, forex risk management, IFRS).’

The solution is to always be aware of protocols, upcoming regulations, and risks reported by banks. That will help you anticipate risks. That, in turn, helps you integrate them into your process and raise awareness across the company. – David Brault

The treasurer is responsible for compliance of payments (read our article on the subject). They should establish an effective monitoring programme.

Thetys offers a compliance module for treasurers: interested? Fill out the form: