Can Payment Efficiencies and Fraud Protection Coexist?

Finding efficiencies in the lessee payment process is a top priority for equipment leasing companies. But what about protection from fraud? Discover how electronic payment tools can deliver both.

A recent Wall Street Journal headline announced: “Makers of everything from bulldozers to food products are on an upswing as production, spending and sentiment improve.” That’s good news for equipment leasing companies, but as demand builds for leased equipment across many industries, so does the pressure to increase efficiencies and fraud protection in leasing operations—particularly when it comes to receivables. And those receivables across the leasing industry are considerable. Dun & Bradstreet, in their 2017 Middle Market Power Index study, says that middle market companies—the category that includes most equipment leasing firms—generated “more than one quarter of all revenue produced by U.S. businesses.” That came to $9.3 trillion in revenue last year.

No matter the company size, lessee payments are the lifeblood of every equipment leasing company. The sooner payments are safely received, entered, deposited and credited, the stronger the balance sheet. But a 2017 study by the Association of Financial Professionals showed two things: More than half of all business-to-business companies are still using the least efficient form of payment—paper checks—and that checks accounted for 75 percent of all fraud attempts or attacks on those companies. Still more worrisome is that this number is on the upswing, reversing a years-long trend. The study showed that “while enterprising criminals keep developing new and innovative ways of scamming their victims, they are also reverting back to old-fashioned methods.” Fraud involving checks is chief among those methods.

The recommendation for both greater efficiency and heightened security is the same: electronic payment tools.


One of the most commonly used electronic payment tools is automated clearing house—referred to as ACH. This is a simple and efficient method for receiving recurring payments and allows for better cash flow projections and more certainty of payments. This method is now used to move $43 trillion across the U.S. each year according to NACHA, the electronic payments association.

Here’s how ACH works for leasing companies: At the time the lease is signed, the lessee also signs an ACH agreement, which authorizes automatic recurring monthly debits from the lessee’s account to you. The ACH debit agreement means payments arrive in your account on time and with immediate availability; you eliminate the float time that comes with traditional mail and paper checks.

Once the ACH service is arranged with your bank, your company will authorize “designated users” who will be involved in the ACH processing. Best practice is to engage and use a minimum of two users when originating any payments, with one user to create transactions and place them in the “queue” for approval and submission to the bank, and a second user to review transactions placed in the queue and have ultimate final authority for originating and sending the files to the bank. This provides heightened security and is an effective tool against the threat of internal fraud and errors.

Paying Agent

When you need to manage multiple lessee payments, remitters and receivers, the logistics involved in tracking those payments can be quite challenging. In this case, the most effective and efficient option may be to use a paying agent, a third-party fiduciary that automatically collects payments and disburses funds for you to multiple parties or funding sources. A single payment address is used for all remitters and for all payments. You direct lessees to remit payments to the single paying agent account. Upon receipt of the funds, based on a predetermined schedule from you, the agent distributes the funds to the funding sources. One payment can be split into multiple recipients (multiple funding sources, the lessor and tax payments).

You and the authorized partners you designate will receive easy online access to the remittances received in the paying agent account. Partners can view remittances and activities for their account only. The system keeps sources of payments separate so lessors can avoid commingling funds.

The paying agent provides current-day real-time information on remittances and disbursements. You can view indexed images of checks, invoices and correspondence 24 hours a day, seven days a week. A paying agent can also provide immediate electronic notification of incoming wire payments, as well as statement histories.

Using a paying agent can enhance security and increase your back office efficiency. Your in-house accounts receivable staff will be relieved of time-consuming paperwork and at the same time you will know that payments are secure, and the opportunity for errors is reduced.

The benefits of electronic payments, both for efficiency and security, are compelling. But there are other reasons to consider adopting technology over tradition: reputation and competitive advantage. When you transact business with large corporations and use the same electronic payment tools they use to operate efficiently, it can elevate the perception of your company by making it a better fit with their established systems.

But what about lessees who are still paying you by check instead of using electronic systems? There are other options available to help you build efficiency and security.

Remote Deposit Capture

One option for harnessing technology to manage check payments is remote deposit capture—sometimes referred to as desktop deposit. Using this technology, you simply scan received checks and send directly to the bank. Remote deposit capture also eliminates the need for handwritten check endorsements and paper bank deposit slips. Beyond efficiency and security, remote deposit capture offers flexibility. Instead of rushing to make early cutoff times often required for paper check deposits, your receivables team can be productive later in the business day. You can also save on courier costs and the pressure of meeting pickup deadlines as well.


Another option for lessees who want to continue paying you by check is lockbox. Your lessees send their payments directly to a P.O. box to which your bank has access. Your bank then manually collects checks for you each day. This eliminates the need to handle the daily incoming mail and prepare daily paper deposits, and this can cut down on processing costs. Using lockbox can also speed up collections so you can convert your receivables into cash more quickly.

Taking Advantage of Market Conditions

The economic environment for equipment leasing appears to be healthy. With growth across multiple industries, the demand for leased equipment for everything from bottle cappers to backhoes is clearly on the upswing. While that is good news, the impact on your business must be considered. Every step you take to build efficiency into your operations can pay dividends. And every move you make to ensure against fraud can protect your leasing business today and in the future. Harnessing the power of electronic payment tools can be the route to both.

The views expressed by the author are not necessarily those of Fifth Third Bank and are solely the opinions of the author. This article is for informational purposes only. It does not constitute the rendering of legal, accounting, or other professional services by Fifth Third Bank or any of their subsidiaries or affiliates, and are provided without any warranty whatsoever.