More than half (58 per cent) of financial decision makers view financial loss due to payment fraud as an inevitable part of running their business, according to new research.

An annual Ipsos MORI survey of 800 of financial decision makers from across the UK, for payments provider Bottomline Technologies, found that firms are being hard hit by rising levels of payments fraud, with 81 per cent unable to recover more than half of their losses caused by fraud - a figure which rises to 88 per cent for small businesses alone.

Just one in 10 respondents said they had been able to fully recover more than half of losses incurred due to fraud in the last year.

The COVID-19 pandemic has also led to a rise in scams for SMEs, with small businesses seeing losses rise 14 per cent and medium-sized businesses losing 38 per cent more in 2020 than in 2019.

In comparison, respondents at larger enterprise organisations recorded only a four per cent decrease in scam losses in 2020, with total fraud losses dropping from £349,077 in 2019 to £336,408 in 2020.

The survey found that while money lost due to fraud has increased, individual occurrences have decreased. The number of respondents overall indicating that fraud impacted their business dropped from 45 per cent in 2019 to 34 per cent in 2020, suggesting a growing awareness of the risks involved and a willingness to invest in technology to help manage threats.

The reduction was greatest among large corporates and enterprise organisations, which reported a 22 per cent and 25 per cent drop respectively in fraudulent cases, versus 2019.

Despite last year’s survey indicating that over one third (37 per cent) of respondents were planning to adopt real-time payments within their businesses in the next 12 months, the 2020 results did not bear this out.

Claimed usage among respondents remained flat, with 53 per cent in 2019 and 50 per cent in 2020 saying that they are using real-time payments regularly.

A number of respondents indicated that their companies only use real-time payments to fulfil routine requirements such as: making payroll payments (45 per cent), paying taxes (46 per cent), or paying regular invoices from suppliers (48 per cent).

That said, 89 per cent said their businesses continue to pay suppliers late, only a slight improvement from 92 per cent in 2019.

Nigel Savory, managing director for Europe at Bottomline, said: “Late payments can have a critical impact on businesses and in time of crisis such as the current COVID-19 pandemic, smaller players simply can’t afford the repercussions.

“Given the range of payment methods available such as real-time payments, the prompt payment code, ‘duty to report’ legislation and sensible business practice to maintain continuity of supply, there is no reason why small businesses should be placed at any additional risk from larger corporates hoarding cash reserves.”

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