Compliance issues have become a major risk for many companies. The possibility of AR fraud entangling companies in illegal transactions with customers is a growing concern. The consequences of unknowingly being involved in money laundering, funding terrorism, bribery, violating economic sanctions or other illegal activities can have significant legal, financial and public relations consequences.
AR fraud risk has increased with the shift to remote work and heightened reliance on email and text for communication, which makes it more difficult to know new customers and set up their master data files correctly. Accounts receivable automation and best practices for vetting and monitoring customers can help to mitigate AR fraud risk in the work from home era.
Due Diligence
Establish a due diligence check list for vetting new customers.
- Review the customer’s business activities and history. Make sure you understand the customer’s business
activities. - Check bank, trade, credit and business references. Investigate anything out of the ordinary.
- Establish a system to rank customers for AR fraud risk, and rank each customer.
Ongoing Monitoring
- Establish frequency for monitoring customers based on AR fraud risk ranking.
- Watch for sudden surges in business activity.
- Check for changes in credit ratings or financial condition.
- Monitor for inclusion on an economic sanctions list.
- Watch for any negative press coverage.
Online Customer Portal
AR automation including an online customer self-service portal can help to mitigate fraud risk in your AR department.
- An online customer portal can streamline the collection and maintenance of master data for customer profiles, and documentation for compliance requirements. Problems creating or maintaining data and documentation for compliance requirements should be closely reviewed.
- A customer portal can also facilitate collaboration and communication between internal stakeholders, customers and business partners. Internal stakeholders at various touch points in your business processes should be involved in monitoring and reporting any unusual customer activity or news.
AR automation and an active program to vet and monitor customers can help to mitigate the risk of AR fraud,
and reduce the chances of your company being inadvertently involved in illegal activities with customers.
Digital Solutions
Accounts receivable and accounts payable cloud-based solutions with customer/vendor portals and digital processes keep vendors and customers connected whether they work remotely or not.
With a connected accounting solution for your accounts receivable and accounts payable teams to coordinate work with customers and vendors, you can go digital and enjoy the benefits of office automation.
Lockstep Collect, a leader in cloud-based connected accounting solutions, can help you boost productivity and increase cash flow with:
- Automated Communications
- Customer Self-service
- Collections Activity Management
- Reporting & Forecasting
Lockstep is an experienced software partner that can help you increase efficiency and accelerate cash flow.
If you would like to learn more about how you can benefit from connected accounting solutions, please contact Lockstep or visit us at www.lockstep.io.
