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UPS enhanced controls & fraud risk reduction tactics: 2004-2011

Ernie Caballero's impressive presentation at Eurofinance's International Cash Management conference in Rome entitled 'UPS Europe Treasury - International Cash Management' described their four pillar approach to treasury organization and strategy. The four UPS pillars - visibility and transparency, centralised liquidity management, sound control structure and information technology - are implemented using a centralised approach combined with decentralised execution.

In the description of their Sound Control Structure, Ernie described the 'Enhanced Controls and Fraud Reduction Tactics' they have employed since 2004. These included:

  • 2004-2011: reduction of signatories by limiting the signatories to those people required to meet operational needs, and elimination of all signatories on Accounts Receivables by automated sweeps to concentration accounts. Over the period, this produced a significant reduction in average no. of local signatories/bank account - see Figure (Source & Copyright©2012 -  UPS EMEA Treasury): 

  • 2005: core bank required to notify Treasury if anyone tries to open or close an account or change signatories
  • 2007: all Electronic Bank platforms centrally system administrated by Treasury to restrict access to approved individuals. New Access has to be requested via a Treasury intranet portal
  • 2010: elimination of all manual cheques with no local cheque books plus local cheque printers controlled from centralised SSCs which eliminated of "paid not booked" fraud.

 The important lessons from this UPS case study are that 1) fraud prevention and reduction require constant focus over many years and 2) a combination of process and technologies are needed to get fraud levels down and to keep them down.

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