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WHY CLOUD ACCOUNTING IS SHAPING THE FUTURE OF BUSINESSES

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By Martin Bown, Founder and MD of My Management Accountant, a leading Yorkshire-based cloud accountancy practice

In an increasingly digital age, more and more businesses and services are adapting to become fully functional online, with the ability to store all forms of data in a central cloud service continuing to become more prevalent.

Nowadays, the uptake for complete cloud infrastructure is massive, with more than a third (36%) of European enterprises adopting this approach last year alone1 and this integration is expected to climb further.

Cloud accounting has had a huge impact, completely streamlining the way businesses manage their finances, but what exactly are the benefits to adopting cloud-based accountancy?

Martin Bown

 

Accessible and reliable

Using the cloud to manage your accounts gives you instant access to your financial data from anywhere, be that on a laptop, desktop or mobile phone.

Having access to such information at your fingertips allows you to complete tasks such as paying bills, preparing quotes, sending sales invoices and taking payments remotely, allowing you to stay on top of things even whilst you’re working away from the office. This is something that is a huge benefit given how many companies have adopted long term hybrid working weeks.

By contrast, if your business is reliant on dedicated software, managing these accounts would likely be limited to the use of a specific desktop computer which hosts the software, with typically only one individual able to access it at any given time.

Not only does the cloud make accounting more accessible and efficient but it is also notably more secure. All cloud servers are continuously backed up by the server hosts and monitored around the clock to ensure that manual back up copies of files and fail safes against failures in specific software programs are not needed.

Furthermore, the scale of such cloud servers means that they are far more reliable; there are rarely, if ever, issues with unscheduled downtime. As a company that has exclusively used Xero Online Accounting software for the last ten years, the number of issues we’ve experienced have been negligible, which gives us peace of mind that we can provide a continuous and reliable service for clients.

 

Adaptable and flexible

Cloud infrastructure, by its very nature, connects different stakeholders together in a way offline, dedicated software simply can’t. With members of the business or even independent accountants all able to access the same central point on the cloud, everyone has access to the same version of the software and live documents, which eliminates duplication of work and minimises any miscommunications at the same time.

The fact that cloud accounting software also gives you the option to connect to your bank account feed enables you and the accountants to track real time financial information about the business, allowing you to forecast and adapt your potential spend or investment as you go. This type of adaptability has become a crucial characteristic of a lot of businesses since the start of the Covid pandemic.

Cloud accounting provides a basic software suite for you to complete all tasks related to financial management but is adaptable and gives easy access to more bespoke services, depending on what you need to use it for.

Whether you require access for clients and staff all in one place, a place to manage compliance workflow or even ledgers for smaller businesses, the variation is easy to integrate all through the power of the cloud.

Looking at cloud accounting flexibility a little more closely, there are also a number of different software add-ons you can utilise at the drop of a hat to enhance your user experience further and make the process even more efficient.

Features such as Dext for auto-entry will allow you to upload images of items like receipts or supplier invoices, with the software able to extract the data in a fraction of the time of manually inputting it, whilst apps like Stripe and GoCardless are cost effective solutions to provide your customers with ways to pay you.

What’s particularly beneficial is the fact that you are able to choose which add-ons suit your business, preventing you from paying money unnecessarily on comprehensive packages you often won’t utilise.

 

Costs and value for money

The practical application for cloud accounting is seamless but it is also cost effective. Making use of a cloud entity has everything in one place without having to pay huge fees to buy individual pieces of software or engineering to install, update and maintain them.

As an example, Xero has a monthly cost of just £26 for the standard version, which grants access to unlimited users. This is a stark contrast to services used by clients we’ve transitioned previously.

From supporting one business to start utilising the cloud, they made significant savings, having previously spent a staggering £10,000 a year on their software license, a fee that was subject to increase based on the number of users, further outlining the value for money that cloud accountancy software gives you.

One thing is for certain is that as pace with which cloud accounting continues to evolve, the accessibility and reliability of cloud-based services is becoming too big to ignore. I anticipate that as cloud software continuously improves, this method of accounting will become a mainstay in the majority of business sectors for a long time to come.

 

Business

Shutting off mule accounts to effectively tackle APP fraud

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By

Cleber Martins, Head of Fraud Management for Banking at ACI Worldwide

 

Authorised Push Payment (APP) fraud is on the rise. Losses from this type of fraud are expected to record an average CAGR of 21% from 2021-26 in the UK, US and India. To combat this rising threat, late last year the Payment Systems Regulator (PSR) published new rules for banks and building societies regarding the reporting of APP fraud.

While losses won’t keep pace with the overall growth of real-time payments, banks shouldn’t be complacent regarding the risks. And though it’s true real-time payment channels have created a reality where fraudsters can succeed faster, it is mule accounts that allow them to keep getting away with it.

Fraudsters recruit mule accounts often through identity theft, turning a user’s account into a mule account without their knowledge, or by recruiting and targeting more vulnerable people on social media and other online communication channels. Thereby enabling criminals to hide their identity and quickly move stolen funds beyond the reach of banks and authorities, either through other mule accounts at different banks, or by buying crypto or NFTs. This is why, in order to effectively tackle APP fraud, banks need to shut off these mule accounts once and for all.

Banks battling back

Currently, most banks only tend to check outgoing transactions. This means that when a mule account suddenly receives money from numerous different accounts, following little to no activity, it’s usually not picked up. And this needs to change.

Cleber Martins

When battling back on scams, banks need to have the appropriate Know Your Customer (KYC) standards. Thus allowing them to monitor the money coming in as well as out of customers’ accounts and analyse the user behaviour of those accounts. This all helps banks to monitor for synthetic and stolen identities in relation to the money coming into accounts.

Being able to monitor and analyse all the data in real-time requires machine learning algorithms with rich contextual information. Put simply, these models are only as good as the signals and inputs they have been given. This means the more financial institutions – on both the sending and receiving end of the transaction – collaborate on signal sharing, the better they can target mule accounts. Additionally, more data and more accuracy should also lead to a decrease in the number of false positives and an improved user experience for legitimate customers.

To effectively shut off the supply of mule accounts, better collaboration and data sharing between banks and financial institutions are needed and with the introduction of the new PSR rules, we could see this quickly come to life.

Why receiving banks must be held accountable

There’s currently almost no risk at all for receiving fraudulent transactions into mule accounts, despite hosting the mule accounts used by fraudsters to receive stolen funds. This results in most banks doing little to no monitoring or analysis of the money coming into accounts. And little to no meaningful intelligence being exchanged between the two ends of a transaction. To turn the tide on scammers, this needs to change.

The Payment Systems Regulator (PSR) has said that in addition to putting mandatory reimbursement for most victims of APP scams, liability should be split equally between initiating and receiving banks. Unless the receiving bank can prove it has gone to greater lengths to do it’s checks, in comparison to the initiating bank, resulting in the initiating bank being held more financially liable.

This should incentivise a major shift in how banks monitor fraud activity, by increasing how they monitor the money coming in, in combination with behavioural profiling of the receiving accounts. Ideally, once the two sides of a transaction are working together, a “fraud DNA” can be constructed to enable more precise decision making. One strand of that DNA, in practice, would be the initiating end’s sending an intent for a real-time payment, including intelligence about the initiating account in metadata format. The receiving end would then correlate that with their own, thereby adding the second strand of intelligence to the DNA chain. Finally, a decision would be made as to whether to allow the transaction to be completed.

This increase in collaboration between banks, would symbolise the first step of building a framework that promotes the sharing of insights and could mean the end of mule accounts as reliable tools for fraudsters.

What future collaboration might look like

While banks play an important role, mule accounts are often created on social media, through the telecom industry, via email or even postal mail. Making APP fraud a cross-industry problem. This requires a next-level, cross-industry collaboration strategy, that sees solutions, techniques and intelligence being shared between banks and vendors, merchants, issuers and acquirers, and even with social media companies and telcos.

Ultimately, it’s about ensuring customers are better educated and protected and that banks perfect their monitoring of the money that comes in, as well as out, all while sharing that information. Building a true cross-industry framework will help deprive scammers of access to one of their main conditions for growth. As a result, we should begin to see the value of APP scam losses, as a proportion of the value of real-time transactions, drop.

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Business

Want to increase positive customer purchasing experiences? Let’s talk IVR

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By

Andy Watts, Senior Account Director, Financial Services, at Odigo

 

For many years, debit and credit cards have reigned supreme, with the latest figures showing that in just the month of August, there were 2.47 billion debit and credit card transactions. While this is unlikely to change any time soon, the way we pay has.

The popularity of paying ‘in person’, using chip and pin, has reduced significantly while paying online has skyrocketed. Nevertheless, during the highs and lows of this journey, making payments over the phone – using interactive voice response (IVR) – has remained.

When it comes to credit, debit and digital payments, the lack of physical cash can sometimes add an abstract layer to the purchasing experience. Resulting in some customers lowering their guard when it comes to financial fraud and risk, and the same goes for Interactive Voice Response (IVR) payments.

To combat this, businesses need to actively ensure their contact centres are internally remaining compliant with security standards when it comes to the data flowing around the contact centre, as well as tackling the external lack of IVR awareness among their customers.

Andy Watts

Fighting fraud from the inside

During the pandemic, the fear of fraud and breaching data security increased, as contact centre agents were required to work remotely. It’s fair to say, remnants of that fear still remain given the increase in spoofing scams, other types of fraud and hacks.

However, hope is far from lost. Different elements of these risks can be mitigated through the Payment Card Industry Data Security Standard (PCI-DSS). This global technological and operational standard aims to drive the adoption of data security standards for safer payments, including IVR payments. Providers that commit to the standard need to get involved in the protection of their customer’s data while it’s in storage, processing and transmission. As well as also regularly testing and monitoring their networks and maintaining a vulnerability management program.

Unsurprisingly, customers want to be assured of accurate, safe transactions and that organisations will follow through on their commitments to goods or services. Contact centres need to continue to adhere to operational standards to ensure compliance and security, and ensure they ramp up education and awareness around the risks of IVR payments. All in an effort to reassure their customers and enable them to have the smoothest and safest customer experience.

Ensuring education from the outside

The contact centre is the epicentre of personal customer data. Contact centre agents regularly pull up and use insights from the data accumulated to amplify customer understanding and add to new data points based on continuous customer interactions. To ensure a continuously high-quality customer purchasing experience, when using IVR payments, an awareness of the importance of data security – by both agent and customer – is crucial.

IVR payments are almost always fully automated for 24/7 self-service and are expertly tailored to suit the customer and business needs. In reality, this translates into customers slowly being guided through a process of intuitive phone menus and additional information to ease any fears of fraud and other anxieties they may have.

Information about the process of IVR payments, how to spot fraud attempts and how to best secure data must be readily available for customers. If this is not already being provided by contact centres, then businesses need to re-evaluate their processes, sooner rather than later. Agents should be actively educating customers and information should be readily available via FAQs pages and chatbot functions.

While IVR payments remain a popular payment method for customers, contact centres need to ensure they are internally operating to the highest security and compliance standard possible. By securing their data in transit and storage whilst simultaneously ensuring ease for agents to utilise the data to continue providing meaningful CX. All of which can reduce customer anxieties around potential fraud and increase awareness around the risks of IVR payments, while delivering high quality and seamless customer purchasing experience.

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