The Bottom Line for Payments Risk Mitigation: Automation and Education

Payments risk exposures arise from many sources – some of which are internal within company walls, and others which arise well beyond company walls, and even across international borders. Companies of all sizes need to identify, understand, and mitigate risk exposures arising from both internal and external sources. Fraudsters do not discriminate by company size, industry, or payments type.


Many payment risk exposures arising from internal or external sources can be mitigated through employee education. Each employee involved in processing payments should understand how their actions, or lack thereof, can impact payment risk exposures. These employees should also be aware of the controls and technology your company has in place to mitigate and detect payments fraud.  Employee education would also do well to include how employee behaviors relative to email communication and social media activity can create payments risk exposures.

There are common tools and tactics that companies leverage to mitigate risk exposures by payment type that companies would do well to consider. Relative to checks, common fraud control tools include positive pay, segregation of duties by accounts, daily reconciliations, payee positive pay, reverse positive pay, and enhanced security features on checks. Companies leverage daily account reconciliations, various forms of ACH debit blocks and filters, and separate accounts to help combat ACH related payments fraud. Fraud control tools and tactics include upgrading and enhancing authentication for access to company systems and/or bank platforms, restricting access to certain systems only to company-issued laptops, restricting certain payments activities to a specific company computer or company-issued laptops, and restricting email activities such as opening certain types of attachments.

The bottom line is that employee education and automation form the foundation of an effective payments risk mitigation strategy at any company.

Best Practices Against Payment Fraud

The following represent ten best practices for companies to leverage in mitigating and/or eliminating payments risk exposures:

  1. Educate each employee involved in processing payments relative to how they directly and indirectly impact payment risk exposures.
  2. Educate each employee how their behaviors relative to email communication and social media can create risk exposures for your company.
  3. Conduct a cost-benefit analysis of tactics being leveraged by other companies to mitigate payments risk exposures across each type of payment used by your company.
  4. Leverage technology to minimize manual data entry and manual intervention in payments related workflow.
  5. Leverage technology that optimizes end to end payments processing visibility.
  6. Leverage technology that automates workflow.
  7. Leverage technology that automates controls and policy compliance.
  8. Leverage technology that creates a clear audit trail for each payment transaction.
  9. Minimize the number of people involved in payments processing consistent with the right segregation of duties.
  10. Minimize the number of systems involved in payments processing.

Ernie (@ErnestHumphrey) currently serves as the CEO of 360 Thought Leadership Consulting. He has diverse industry knowledge as a seasoned corporate practitioner, a leader at the Association for Financial Professionals (AFP), and as a driving force behind the development of the largest online community for senior level financial professionals (Proformative). Ernie is also a Certified Treasury Professional.