Efficient and secure payment methods are crucial for smooth transactions, especially when it comes to B2B payments. While digitalization has opened doors for quicker payment settlements, fraudsters are continually looking for new weaknesses to exploit, requiring business owners to stay vigilant in understanding trends, tools, and threats.
In this blog, we explore four of the most common B2B payment methods and the potential security risks associated with each. We'll also equip you with valuable tips and strategies to safeguard your B2B transactions and protect your hard-earned capital.
Unlike consumer purchases where transactions are immediate and for smaller amounts, B2B payments involve larger sums and often follow a credit system with net terms. Stricter approval processes and credit checks are common due to the higher financial stakes. On top of that, B2B transactions frequently involve invoices and may utilize specialized payment methods beyond those used for everyday consumer purchases.
There are four B2B payment methods that every company will likely see at some point: checks, wire transfer, ACH, and real-time payments. Each of these methods have benefits and drawbacks. Choosing the right vendor payment method for your business depends on factors like transaction speed, cost, and security needs.
ACH payments strike a balance between speed and cost in the B2B world. While not as instantaneous as wire transfers, they offer faster settlement times compared to checks. However, ACH transactions come with lower fees, making them a more budget-friendly option for businesses.
Wire transfers are the speed racers of B2B payment methods, offering near-instantaneous settlements for urgent transactions and decent security. But this lightning speed comes at a cost, with wire transfers typically carrying the heftiest fees compared to other B2B payment methods.
Despite the world’s increasing digitalization, checks are still a familiar payment method in B2B commerce. They offer a paper trail and a sense of finality upon issuance. However, their biggest drawbacks lie in slow processing times and high vulnerability to fraud — late, lost or stolen checks can cause significant delays and financial losses.
Real-time payments are revolutionizing B2B payments by offering instant settlements, improving cash flow, and hastening reconciliation processes. These lightning-fast transactions may have limitations, though, such as lower transaction caps compared to other payment methods. Real-time payments are also still in the early stages of adoption, potentially leading to compatibility issues between different B2B payment methods.
What’s the one thing that all four of these payment methods have in common? They are all susceptible to fraud. There are several key reasons B2B payments are primary targets for fraudsters and bad actors:
B2B payment fraud incurs a massive loss for any business—not only are finances impacted, but valuable resources such as labor and time are affected as well.
The cost of B2B payment fraud can ultimately be a significant hidden hemorrhage on your business’s finances.
So how do you prevent this from happening to your business?
First and foremost, you must identify action items that you can start working towards now to eliminate any vulnerabilities in your existing B2B payment methods. Bad actors are constantly devising new schemes to exploit weaknesses in B2B transactions, but by implementing a multi-layered approach, businesses can drastically reduce their risk of falling victim to these attacks.
Let’s explore five best practices that can be incorporated into your B2B payment processes to make sure that your payments aren’t at risk.
Your entire team needs to be able to know common cyberattack tactics like social engineering, phishing and spear phishing, spoofing, and executive impersonation. They also need to be equipped with the ability to appropriately handle these events as they arise—for example, immediately flagging and reporting a suspicious email to IT, or letting both IT and your executive team know when a scammer is sending out a round of impersonation texts. Remember too that cyber threats are never stagnant. They’re always evolving and trying new angles, so you need to make sure that you have regular trainings and refreshers to keep your team well prepared.
Too many manual processes open you up to a greater chance for errors, and consequently, a greater number of vulnerabilities that an attacker can easily exploit. To reduce the potential for weaknesses, make sure that you’re investing in automation wherever possible. The more that you can automate, the fewer opportunities you’re giving attackers to get into your systems and access sensitive information.
You also need to ensure that you have a powerful and trustworthy bank validation process in place, which will let you know when red flags pop up and help you avoid putting data into the wrong hands. But be careful: traditional bank account validation might not be enough to provide full protection so make sure you have a foolproof process in place.
Enforcing internal controls is critical to preventing people from overriding anything in the ERP or other systems and doing something they shouldn’t. Attacks on ERPs and other databases are a big threat to businesses. Be sure to enforce strict segregation of duties so that roles are clearly defined, and employees have an understanding into what they can and cannot make changes to.
Finally, it’s important to ensure safety and security from the moment you onboard your vendors. During this process, you’ll want to verify vendor legitimacy and offer strong authentication protocols to help prevent fraudulent activity. For example, Trustmi utilizes a unique Trust Network, fostering collaboration and information sharing amongst businesses, allowing them to collectively identify and combat emerging fraud tactics.
This is also the time when you’ll set up payment terms and establish communication channels, so it’s paramount to have excellent cybersecurity during each of these steps, as these can be vulnerable points for security breaches.
It’s time to future-proof your business with an expert partner you can trust to streamline and secure B2B payments.
Trustmi offers a holistic approach, going beyond basic security measures to address vulnerabilities across the entire payment process.
Our comprehensive protection shields businesses from fraud attempts like business email compromise (BEC) and fraudulent invoice manipulation. We leverage AI and machine learning to analyze vast amounts of data, effectively detecting anomalies and suspicious activity that might slip past traditional methods.
Trustmi provides businesses with granular control over their security settings, empowering them to tailor protections to their specific needs and risk profiles. This level of customization ensures that businesses get the most out of our security features. Our flexible and modular solution, allows you to integrate the tools you need without unnecessary complexity.
Gain peace of mind and confidence that your B2B payments are safeguarded by cutting-edge technology paired alongside an innovative approach from Trustmi. Contact us today to learn how we can help your business stop payment fraud in its tracks.
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