3 ways managing client bank accounts creates risk for your firm

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Business owners rarely settle for just any accountant. The client-accountant relationship often spans decades, and nowadays, many accountants even handle bill payments on behalf of their clients.

However, the inherent complexity in this process, with accountants juggling payments for multiple clients, is a ticking time bomb.

Imagine managing a variety of bank accounts, with a hodgepodge of passwords circulating among your team, and a slew of account numbers and sort codes that all seem to blend together come month’s end.

It’s a time-drain, and to make matters worse, someone has to painstakingly update spreadsheets following these payments, eating up a significant portion of your monthly hours (if you’re on retainer, for example).

Payment errors can be disastrous for both accountants and their clients, especially in the face of a rising tide of fraud. In the UK alone, an estimated £1.2 billion was lost to fraud in 2022. We need a better way to manage Accounts Payable.

Current processes are slowing you down and creating risk. Here are three reasons why:

1.Payments gone MIA

Picture this: it’s a Friday, the end of the month, and in a fleeting moment, you mistake Bobby’s Cookies for Billie’s Car Parts. Before you know it, you’ve mistakenly sent a payment to the wrong supplier. It sends a shiver down your spine, doesn’t it?

While you might eventually recover the funds, it comes at a cost. You’ll need to engage in a back-and-forth with the bank, file a claim, and hope that the recipient has the integrity to return the money. Meanwhile, your client’s small business suffers.

2. Invoice fraud: A small business nightmare

Ever heard of invoice redirection? It’s a fraudulent scheme where scammers trick you into altering the bank details on an invoice.

This type of fraud leaves legitimate invoices from suppliers unpaid, and businesses substantially out of pocket. According to a 2022 report by UK Finance, malicious redirection scams, also known as invoice fraud, totaled £56.7 million in 2021, with an average loss of over £14,000.

For a small business, a loss of £14,000 can be catastrophic, potentially ending their operation. This type of fraud frequently occurs when email accounts are hacked – the primary method of communication when handling accounts payable.

Before the introduction of ‘Confirmation of Payee,’ there were no effective tools to mitigate the risks of invoice fraud. And for a long time, this technology was only available to banks. This is yet another reason why manually accessing client bank accounts to pay bills is too risky.

3. Accessing multiple client bank accounts

We mentioned this earlier, but it’s worth reiterating because human error is one of the most significant risk factors at play here.

Clunky log-ins, misplaced security devices, forgotten passwords, constantly changing bank policies, distractions like cake, tea, and Amazon deliveries – you’re just one slip-up away from missing an urgent payment or sending money from the wrong account to the wrong supplier. Such a mistake could cost your client dearly.

And let’s not forget the varying rules each bank imposes. Rules you must remember and follow to ensure seamless payments.

Open Banking won’t save the day

Open Banking was hailed as the solution to these problems, but in some ways, it has only added to the complexity. While Open Banking has gained popularity in recent years, it doesn’t do enough to mitigate the risks of handling payments for multiple clients.

In fact, some banks, like Metro, Mettle, and Co-operative bank, don’t even allow payments via Open Banking when making single payments. Open Banking isn’t as open as we’d like to think.

The challenges compound when dealing with bulk payments, especially with major players like HSBC, Starling, Monzo, and Barclays, either not supporting bulk payments or imposing limitations on the number of payments per batch, as well as restrictions on amounts and timings.

Apron — A Safer Way to Pay

Most solutions available today are add-ons that address only a part of the problem. Apron simplifies the entire payment process, eliminating the need to log in to client bank accounts ever again.

Here’s how Apron works:

  1. Inside Apron you’ll find your Hub. From here, you can add clients and team members, and create payments.
  2. Select who to pay, who approves a payment, and who makes a payment.
  3. Payment is made without you ever having left Apron, and because Apron is synced in real-time with your Xero or QuickBooks account, reconciliation is automatic.

No bank access or wallets required — No top-ups, and no need to access a client’s bank account.

No more copy-pasting — Apron’s Snap! feature automatically captures account details, sort codes and addresses from invoices and other documents.

Pay with confidence — ‘Confirmation of payee’ flags appear if for some reason the payee’s account details don’t match up. And, being able to hide Direct Debit payments means you won’t pay twice.

Ready to get your Apron on and see how simple payments can be? Get Apron for free and start exploring.

Want to learn more about fixing the broken Accounts Payable process? Download our guide, ‘Why Your Accounts Payable Is Broken — And How To Fix It’.

This content is brought to you by Apron.

Apron lets you sort, approve, and get client invoices paid in seconds.

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