How using mobile apps for authentication helps suppliers prevent fraud while getting paid quicker.
Customers, fraud, and regulation, oh my! Who knew getting paid what you’re owed could be so complicated? Below are a few reasons why.
- An internet fraudster advertising concrete for $70 per yard, paid in advance, on Facebook managed to secure a sizable order. That person placed a cash on delivery (COD) order with a concrete producer using a fraudulent credit card. The dispatcher was too busy to verify, and the material was shipped, placed, and never paid for.
- Some customers, desperate to stretch cash, use producers as their bank. They constantly delay payment, short-pay invoices, or invent disputes to buy time. For some cash-strapped customers, rolling their accounts payable becomes their primary source of liquidity, especially if their orders make up a significant portion of their current assets.
- Small business owners often lack time management and basic financial skills. Even with the best intentions and ample assets, they may routinely forget to pay their bills.
At an industry internal rate of return of around 8.5 percent, losing your investment power to nonpaying customers and fraudsters is a hidden yet costly expense. Technology offers a way to plug the holes and minimize the losses. As an example, let’s look at how producers can use an accounts receivable and payments platform and mobile app to chip away at slow payment and keep up with the fraudsters.
Fast and easy authentication
COD orders can get stinky after a few days, much like the fish of the same name. When dispatchers have to process COD orders quickly and accept credit card numbers over the phone, there is limited time to verify the details. The fundamental time pressure dispatchers face in our industry provides a window for fraudsters to exploit.
The Suppli platform allows credit and dispatch teams to send payment links to COD customers via text or email. These payment links use multi-factor authentication for credit card orders, including COD. The techy description for this method is 3D Secure (3DS) authentication. Designed to add an extra layer of protection for online credit and debit card transactions, the security protocol involves verifying the cardholder’s identity through passwords or one-time codes during the payment process, helping to prevent fraud.
Like most tech solutions, success requires user buy-in. Your team must use the chosen tool to initiate the multi-factor verification that authenticates the genuine cardholder. Text and email links are then issued for immediate payment. This is a simple, quick process that removes any liability of the producer for fraudulent charges.
Fighting fraud is just the beginning
Beyond fraud prevention, platforms like Suppli enable smoother payment processing across the board. The mobile app offers customers several incentives of convenience for customers who choose to pay. For those who choose not to pay (and we all have those problem customers), best of luck!
First and perhaps most important, regardless of the producer’s financial system, customers have anytime access to their financial account with a branded, mobile system. For the many small and mid-sized customers who struggle to balance their hectic schedules with their good intentions to pay on time, this is critical. Consider it a first step in removing the “friction” of paying what they owe.
Automated bill reminders further assist customers with good intentions. Delivered in multiple formats, these reminders act as a helping hand to keep payments on track. After all, in the world of accounts receivable, “a digital nudge is worth a thousand words.”
Reconciliation and fee management
Your customers often must match invoiced amounts to specific tasks performed to get paid for their work. Progress benchmarks need to be met and liens honored, along with a host of other regulatory requirements. Mobile app users, wired through interoperability directly with the enterprise resource planning (ERP) or accounting package, can use workflow options that eliminate manual entry for reconciliation with every payment. This simplifies the payment process while reducing human error.
Producers also have to consider that transaction fees for individual credit card payments can add up. The platform allows the ability to pass on those fees to customers. Producers also can create customer-specific rules, like only charging fees on past due invoices, to provide extra flexibility.
An alternative to making electronic credit card payments is ACH (Automated Clearing House). ACH transfers are essentially free of any transaction charges. Customers can securely use their own accounts to process payments, limiting the need for producers to share sensitive ACH information, which is another step toward robust fraud protection.
Our modern, interconnected world is both essential for competitive business and a field of opportunity for cybercrimes. Dorothy was right when she said, “Toto, I’ve got a feeling we’re not in Kansas anymore.” But, just as fraudsters devise clever tricks to steal, there is a legion of competent technology companies offering solutions.
Craig Yeack has held leadership positions with both construction materials producers and software providers. He is co-founder of BCMI Corp. (the Bulk Construction Materials Initiative), which is dedicated to reinventing the construction materials business with modern mobile and cloud-based tools. His Tech Talk column—named best column by the Construction Media Alliance in 2018—focuses on concise, actionable ideas to improve financial performance for ready-mix producers. He can be reached at [email protected].