Social Engineering Defense for Finance Teams: Practical Controls to Prevent Payment Fraud

Social Engineering Defense for Finance Teams

For an early-stage startup, cash is oxygen. Every payment matters, from payroll to a critical SaaS subscription. In this lean environment, where founders or office managers often handle payments, the process is built for speed, not security. While you should start with core treasury controls and payment security, a single sophisticated scam can exploit this vulnerability, redirecting a wire transfer that represents months of runway. The threat is significant; according to the Association for Financial Professionals (AFP), 71% of organizations experienced attempted or actual payment fraud in 2022. The challenge is clear: how to protect finance team from payment fraud without grinding operations to a halt.

The Core Principle: Trust, But Verify Out-of-Band

The foundational defense against most payment scams is a simple concept: Out-of-Band Verification. This means confirming a payment request using a different communication channel than the one used to make the request. If a request arrives via email, you cannot verify it by replying to that same email. The original channel is considered compromised.

Instead, you must use a pre-established, trusted channel. This could be a phone number you have on file from an original contract, a direct message to an executive you speak with daily, or a brief video call. The goal is to sidestep the attacker's controlled environment. This single principle is the most effective tool for phishing attack protection and defeats the majority of business email compromise schemes, moving your team from a reactive position to a proactive one.

How to Protect Finance Teams from Common Payment Fraud Scenarios

Attackers rely on predictable patterns that exploit the speed and informal structures of growing companies. Here are the three most common scenarios and the specific, low-overhead defenses your team can implement today.

Scenario 1: The "Urgent" Executive Wire Request

An email lands from the CEO, seemingly from their phone: "I'm in a meeting, can you wire $15,000 to this new consultant ASAP? We need to close this deal today." The pressure is immediate, and nobody wants to question the founder. This is a classic setup for wire transfer fraud.

The defense is the Two-Person Rule, a practical form of segregation of duties. No single person should ever be able to initiate and approve a payment. For US and UK companies, a common threshold for requiring dual approval on wire transfers is $1,000. In practice, one person prepares the payment in the business bank portal, but a second designated person must log in separately to give final approval. This simple step creates a critical pause, allowing for verification and preventing a single compromised email account from authorizing a payment.

Scenario 2: The "Updated" Vendor Bank Details

Your biotech startup receives an invoice from a critical supplier. The email looks legitimate, using the correct invoice template and branding. However, a small note at the bottom says, "We have updated our bank details. Please direct all future payments to the new account below." Payments sent to this fraudulent account are typically unrecoverable.

The defense is a centralized Approved Vendor List, which acts as the single source of truth for all supplier information. This can start as a simple spreadsheet or be managed within accounting software like QuickBooks or Xero. Crucially, any request to change a vendor's bank details on this list must trigger an Out-of-Band Verification. Do not use the contact information in the email. Instead, use the phone number from your original contract. A scenario we repeatedly see is that the email signature has a fake phone number, so using a trusted source is essential.

Here is a simple script for the verification call:

"Hi [Vendor Name], it's [Your Name] from [Your Company]. I'm calling to verbally confirm a bank detail change request we received via email. Can you please confirm the last four digits of the new account number?"

Scenario 3: The "New" Employee or Vendor Onboarding

Speed is critical when bringing on new talent or an agency. The temptation is to accept bank details for payroll or an invoice directly over email to get them started quickly. This opens a window for an attacker to intercept communications and provide their own account information.

The defense is a standardized onboarding workflow. For new vendors, especially in industries like professional services or e-commerce, bank details should be collected through a secure system or confirmed on a video kickoff call. Never accept bank details sent in an email as the final word. For employees, payroll information should be entered directly into your HR or payroll system by the employee. This creates secure payment processes from day one, reducing risk before the relationship has even begun. As a reminder, remote teams should follow specialised payment security controls.

Making it Stick: Build a Culture of Healthy Skepticism

Controls are only as effective as the culture that supports them. The goal is not to police your team but to foster healthy skepticism where questioning a request is a sign of diligence, not defiance. This requires more than a one-time memo; it demands consistent action from leadership.

Founders must lead by example. If a team member calls to verify an "urgent" request, the founder's response should be one of gratitude, not annoyance. This reinforces that the process is valued. What founders find actually works is celebrating the process publicly. A simple "Thanks for double-checking that payment request, you did exactly the right thing" in a public Slack channel does more than any formal policy. This approach to employee fraud awareness transforms finance team security training into an active, shared responsibility.

Choosing Your Tools: Scaling Defenses with Growth

Your financial controls should evolve with your company. The right tools provide leverage, turning manual checks into automated workflows and creating a clean audit trail that becomes invaluable during due diligence.

Pre-Seed Stage

At the earliest stage, your existing tools are often sufficient. Use your business bank portal's built-in dual approval features. Maintain your Approved Vendor List in a shared spreadsheet linked from your bookkeeping software, whether that is QuickBooks for US companies or Xero for those in the UK. This simple stack is a powerful start. You should also consider virtual card programs for recurring merchant spend.

Seed and Series A Stage

As you grow, manual processes start to break. This is the time to implement AP Automation software like Bill.com, Ramp, or Brex. These platforms formalize the two-person rule, create digital approval chains, and sync directly with your accounting system. This makes financial controls an enabler of speed, not a bureaucratic obstacle.

Series B and Beyond

As payment volume and team size increase, consider adding a layer of email security software like Mimecast. These tools use AI to detect the subtle signs of business email compromise. They can flag or quarantine suspicious requests before they ever reach your finance team's inbox, adding another automated layer of payment fraud prevention.

Your 7-Day Action Plan for Payment Fraud Prevention

Protecting your company from payment fraud does not require a multi-month project. You can dramatically improve your defenses this week with this simple plan.

1. Day 1: Hold a 15-minute team meeting. Introduce the "Trust, But Verify Out-of-Band" principle as your company's new standard.
2. Day 2: Create your master Approved Vendor List. List every current vendor and their verified bank details in a central, secure location.
3. Day 3: Log into your business bank portal. Configure dual-approval controls for all payments over the $1,000 threshold.
4. Day 4-5: Role-play the three common scenarios with anyone who handles payments. Practice the verification call to make it feel normal.
5. Day 6: As a founder, deliberately send a payment request and publicly thank the team member who calls you to verify it.
6. Day 7: Review the week. Ask your team what felt clunky and adjust the process for usability. The best defense is one that people actually use.

Continue building your knowledge at the Treasury Controls & Payment Security hub for more.

Frequently Asked Questions

Q: What is the single most effective way to prevent payment fraud?
A: The most effective defense is "Out-of-Band Verification." This means always confirming payment requests, especially changes to bank details, using a pre-established, trusted communication channel like a phone number on file or a video call, never by replying to the original email request.

Q: How can we implement these controls without slowing down the business?
A: Start with low-friction controls like setting dual-approval rules in your bank portal for payments over a set threshold, such as $1,000. Use AP automation tools as you grow to make approvals fast and auditable. The goal is to make security a routine part of the workflow, not an emergency brake.

Q: Is it rude to question a payment request from a founder or CEO?
A: No, it is a sign of diligence. A strong security culture, led by founders, encourages team members to verify requests. Leaders should publicly thank employees for following the verification process, reinforcing that protecting company assets is a shared and valued responsibility for everyone.