Treasury Management Systems are invaluable in the fight against fraud

Fraud is a constant danger for companies around the world, with its ability to damage the bottom line, and reputation, of even the most profitable of firms. Far from being an isolated risk, a recent report from J.P. Morgan showed that almost two thirds (61 percent) of companies had experienced attempted or actual payment fraud in 2012. These incidents of fraud can be both internal, with employees leveraging access and understanding of internal processes to steal from the company; and external, with outside individuals or groups trying to obtain sensitive financial or customer data.

As such, companies need to protect themselves by instigating strict internal procedures for financial transactions, as well as locking down access to data from outside sources.

Providing oversight

In the fight against crime, Treasury Management Systems (TMS) can prove invaluable in reinforcing a company’s anti-fraud procedures. For example, once implemented, a TMS can provide an enterprise-wide view of all transactions and bank accounts, while monitoring payments and balances. This is no simple task, when you consider the huge volume of transactions that could be involved; potentially hundreds of thousands per month. By reconciling all actual transactions against forecasts, any anomalies, unusual money movements, or suspicious patterns can be flagged for resolution by the treasury team.

Centralization of monitoring and maintenance of bank accounts via TMS technologies can also enable treasury teams to oversee accounts in multiple countries across a variety of banks, and can help them to comply with local and international regulations. Management of bank account signatories is a good example of how the daunting administrative task of managing access to hundreds or thousands of accounts across the world can be streamlined, with the TMS holding a centralized repository of signatories, mapped to corresponding bank accounts. By ensuring employee-account relationships are severed once an employee leaves the company, the potential for fraud to take place is significantly reduced.

Securing payments

Payments are another crucial area of focus when companies are seeking to reduce fraud, as the implementation of electronic initiation and approval of all payments can drastically reduce opportunities for fraudulent activities. By eliminating paper or email requests for payments, phishing attempts and potentially fraudulent payment requests can be neutered. It then becomes increasingly difficult for outside parties to use publicly available information (such as the names of company representatives and email addresses) to target unstructured payment systems. Managing all payment approvals and initiations via one centralized TMS ensures that all tracking is done through one single system, simplifying and cutting down on work processes. In addition, the introduction of digital signatures, which are held within a TMS and applied to all payments, can help with the speedy and accurate validation of payments.

Restricting access

While it may appear to be an obvious step, locking down access points to ensure only the right people have access to sensitive data is a key stage in reinforcing a company’s defenses against fraud. By implementing stringent access policies such as a requirement for stronger passwords and authentication tools, companies can take an important step towards protecting their data. Recent surveys have shown that 90 percent of passwords are so basic that they can be cracked by hackers, highlighting the pressing need for companies to ensure their employees are choosing sophisticated passwords, and changing them regularly.

Companies should also consider hosting their TMS offsite, to boost security. This is because many companies do not apply strict access policies for their server rooms. In addition, they may not have different access controls in place for their TMS, as opposed to the rest of their servers, despite the heightened sensitivity of the data contained within. By removing physical access to the TMS, and moving it to an externally hosted and protected cloud, treasury teams can reinforce their company’s security, eliminating fraud and maintaining data integrity. Treasury teams should also demand that their SaaS TMS providers meet the most stringent of security protocols -- namely SOC 1 and 2.

Technology to the fore

The implementation of an efficient treasury technology such as a TMS can prove invaluable in helping treasury teams to control access to critical data, extending oversight into all of a company’s transactions and bank accounts and simplifying payments processes. In addition, with the right systems, treasury teams can update procedures quickly and easily, roll out upgrades across the enterprise simultaneously, and keep their organizations one step ahead of those with criminal intentions.

Image Credit: Gustavo Frazao/Shutterstock

Andrew Burns oversees both direct and indirect sales for the company’s Northern Europe operations at Kyriba, a global leader in cloud-based treasury management solution. Andrew has more than 17 years’ experience working in the treasury industry for both Corporate Treasury and Treasury solution providers. Before joining Kyriba, Andrew held various positing in implementing and supporting clients at leading enterprises, including IT2, Wall Street Systems and Trema. Andrew’s blend of corporate treasury and software experience provides a unique insight when advising prospective technology buyers. Andrew started his treasury career for Motorola, building up the treasury operation by centralising cash and risk hedging within EMEA, winning the Global Project Award.