Managers of food logistics have to take on many different roles in order to run a successful business. Most have their hands full, from ensuring on-time shipping and service to overseeing back office operations, which leaves minimal time to focus on other important operational aspects of a business. Making and receiving payments safely, is one important operational component that is often overlooked due to its complexity.
Payments is a strategic and important aspect of selling goods and services, and logistic professionals should look into dedicating resources to minimize risk and potential damage to cash flow. Because the majority of today’s logistics-related transactions are completed electronically, ensuring safe, secure and on-time payments is just as important as making safe, secure and on-time shipments.
Payment data for any transaction must flow through a payments processing chain in order to be approved. This processing chain includes everyone from famers to issuing banks and also involves linking multiple technologies. Because a complex set of processes takes place when a transaction is being processed and approved, either during transit, or instantly in less than a few seconds, most logistics managers probably don’t think about where the payment data goes, how many organizations are involved in the processing chain, and how to reduce risk throughout the process.
Before data can be protected, the ins and outs of the information in the system must be recognized. What data is gathered? Where does it reside? Who is accessing the data? When and how do users access it?
Every computer system, filing cabinet or application that uses or stores sensitive payment data falls under the fraud and risk management scope. If possible, limit data usage to applications directly pertaining to payments. Use clients’ data only for transaction authentication and daily settlements. Because employees have the most access to customers’ data and systems, it’s important to limit access only to employees whose jobs’ require it. According to a 2007 National Small Business Administration survey, 41 percent of reported small business fraud was committed by employees. Periodic spot checks to ensure procedures are being followed can help.
Protecting payment data requires ongoing effort. Developing a thorough, proactive security strategy is necessary. Start by updating existing systems and implementing new hardware and software. Install firewalls, deploy data encryption technologies, implement data access controls and track and monitor access to data and networks. Consider a layered data security approach such as the combination of encryption and tokenization technology that protects and removes payment data completely from the business environment, so the systems never hold the actual account numbers.
For logistics managers, today’s Web-based systems update transactions multiple times throughout a typical day. This can eliminate risks, as well as questions from shippers and carriers about whether payments have cleared and where a balance stands, or the status of a dispute, which can add additional personnel expenses due to ongoing long-distance phone calls, e-mails, and fax charges between the shipper and carrier.
Current systems enable carriers to be paid immediately for receivables, reduce overall time, errors and costs associated with paper invoices and payments, and reduce Days Sales Outstanding. Shippers can also leverage multiple payment options, approve or dispute a transaction before making a payment, track the status of a payment, and reduce the amount of additional expenses associated with manual invoice payments.
Data security is an ongoing responsibility, and payment acceptance practices and systems need regular audits. Take proactive steps now to keep sensitive payment data and your business secure. d
Tim Horton is vice president and family product manager, TransArmor and Security Service, for First Data, a global provider of solutions for payment transactions. For more information, visit wwwfirstdata.com.