October 25, 2021
Risky Business – Tips for Protecting Your Business from Fraud
Businesses come in all shapes, sizes, and color logos. They do, however, have some important things in common: they want to manage their cash flow and manage reputation risk.
It’s no exaggeration when you hear that cash flow is the lifeblood of a business; It ensures you can meet your company’s monthly obligations and invest in your short- and long-term goals.
But there’s a lot more to cash flow than meets the eye. According to Chuck Budd, senior vice president and commercial banking team lead at Avidia, managing cash flow really involves three key areas: expediting receivables, efficiently disbursing payables, and protecting your business from fraud.
Chuck, though, has a far more understandable way of explaining it: “It’s really faster, cheaper, and safer. Money in, money out, don’t get ripped off.”
So how exactly can a business accomplish all that?
Avidia just so happens to offer a range of solutions that can help any size business manage cash flow.
“When we work with businesses, we help them manage behaviors, such as risky transactions,” he adds.
There is one such risky behavior that many businesses aren’t even aware of: writing checks.
“With every physical check you issue, you expose your account number and the routing number of your bank, which are located on the bottom of the check, Chuck explains. “Anyone who has that information can debit your account.”
There’s another disadvantage of writing those checks.
“Every time you write a check, you have no idea when it’s going to be cashed. That can put a big strain on your cash flow management,” he adds.
A safer, more profitable alternative to protect your business – and your cash flow
One way a business can mitigate fraud risk and take control of their payables is by using commercial credit cards. Depending on the volume of your business, Avidia offers a range of options, including a virtual integrated payable credit card that provides an added level of security.
Using a virtual or even a physical commercial card to pay your suppliers and others can help boost your cash flow in several ways as Chuck shares.
“It could cost you $5 to write a check between the postage, envelope, ink toner, and don’t forget the human resources to do all that too. Remember, you also have to buy checks in order to write them. If you used a commercial credit card to pay, the cost per transaction would go own to effectively nothing.”
Plus, with a credit card, you have a grace period to make the payment, giving you more time to hold on to your money (known on the commercial street as “float”). What’s more, credit cards, and in particular, virtual credit cards, which are used for one-time purchases, greatly reduce the chance of fraud.
There’s yet another advantage of using a commercial card; Many offer the opportunity to earn rewards, including cash back.
“That would allow you to generate revenue in your business, thereby turning your payables into a profit center,” Chuck shares.
Chuck recognizes that some businesses still need to write checks for various reasons. Don’t worry, Avidia offers solutions to help reduce the chance of fraud.
“Businesses can use Positive Pay, which basically is a list they provide to us of the companies and people they will be paying, the check numbers, and the amounts. Checks that don’t meet the list criteria won’t be paid,” explains Chuck.
Protecting reputational risk
Using commercial cards or electronic filters will also allow businesses to avoid one of the biggest dangers of doing businesses: reputational risk.
“Mistakes happen. A check for $10,000 could be charged to your account for $100,000. That could overdraw your account, resulting in the payee not receiving your payment,” Chuck explains
That could result in your paying less favorable terms or worse, putting your company’s reputation at risk. By using something like integrated payables, you can reduce this risk significantly.
Avidia is here to help you manage cash flow faster, cheaper, and safer
Whether you have a large commercial business or a small, family-owned company, we’re here to help you manage your company’s cash flow and reduce your exposure to reputational risk.