If you run a business, you deal with people. They could be clients, job applicants, and current or former employees. What do all these individuals have in common? At some point, your company could need to verify their income.
This task encompasses everyone from the customer wanting to secure credit to the former staff member seeking a new job. The problem is verifying income isn’t a simple chore. If you’ve ever applied for a mortgage, you know how painful it can be. But what if the process could become easy peasy, at least from your company’s point of view?
It’s possible when you outsource your business’s income verification duties to a trusted, experienced partner. With the powerful combination of technology and expertise, you can streamline the process for each person you deal with. If you’re curious about exploring the benefits outsourcing income verification can bring, here are four to consider.
1. Improve Efficiency
When it comes down to it, verifying someone’s income means following a paper trail. And paperwork can become complicated before you know it. If you need to supply the details, you’re tearing your home apart to find everything. Those W-2s from a year ago are somewhere, but you’re not sure what box or closet they’re in. You get the picture.
Now, if you’re on the receiving end as a business, you’ve got to make sure you have everything you need. You also have to verify the authenticity of the documents people give you. Sometimes you’re the intermediary, confirming someone worked for you and made x amount of dollars. Even with good record-keeping and organization practices, being on the other side of manual income verification processes is tedious.
Moreover, they’re inefficient. Clients don’t get the best experience, and neither do your staff. Partnering with an expert helps your business automate the process using technology, including self-serve platforms. It won’t take weeks or months to complete everything since automated processes can verify income within minutes. The technology does this by securely syncing with payroll systems, eliminating the need for most paperwork in many cases.
2. Stay Compliant
When a business verifies income, personal and sensitive data exchanges hands. Social Security numbers are probably at the top of the list. Even though giving out this number might provoke anxiety in most people, so can handing over other personal details. They may hesitate to disclose residential addresses, former employers, and anything they deem “too personal.”
Of course, you can’t exactly blame them, as data breach after data breach makes the headlines. While the number of breaches trended downward at the start of 2023, six million records were still exposed worldwide. The numbers highlight the vulnerability of sensitive data and the businesses charged with safekeeping it.
As a company managing customers’ and employees’ personal information, it’s more than good business practice to maintain data security. It’s the law. And if your company is found to be out of compliance, penalties and fees are sure to follow. Verifying income may be necessary, but checking all the security-related boxes may not be within your expertise.
Thankfully outsourcing to partners with the right resources can ensure you stay compliant. Income verification vendors have encryption technology and established protocols to prevent unauthorized access. Automated processes also help keep human errors and eyes at bay.
3. Minimize Fraud
Unfortunately, potential fraud is par for the course when money’s in the picture. Detecting and stopping fraud can be increasingly challenging with sneakier tactics. With income verifications, these techniques may include aged bank statements and co-conspirators.
Tactics can also include fake documents, such as 1099s and paystubs. Fraudulent transactions can easily slip by if a business doesn’t have the resources to investigate someone’s sources. You have every indication you spoke with a loan applicant’s current employer. In reality, you “confirmed” their income with a co-conspirator involved in a scheme. The applicant is between jobs and doesn’t have any earnings coming in.
What happens if your business extends the loan to this applicant based on misleading information? You expose the company to risk you didn’t need to. There’s a higher chance the person will default on the loan, leaving your business to pick up the financial pieces. Outsourcing can make it harder for fraudulent information to get through the process.
Automated verification platforms go directly to the source and are tough to trick. In addition, income verification partners have the resources to investigate data sources. They can spend time cross-checking phone numbers and multiple references. In the meantime. you can focus on the parts of your business you know best while minimizing threats.
4. Gain Access To Real-Time Information
Inevitably, people’s income fluctuates. Sometimes those changes happen while they’re applying for credit. It’s not an ideal situation, but it’s not exactly uncommon. Unexpected job losses, self-employment, and sudden windfall inheritances may complicate income verifications.
Having access to real-time income data can be an advantage for lenders looking to make accurate decisions. Businesses that lend on-demand or revolving credit might also rely on up-to-date information. You don’t want to approve a credit line of $5,000 if the applicant’s income recently went below your benchmark. Likewise, you might want to increase a loyal customer’s limit if their earnings suddenly go up.
Outsourcing the verification process can give your company the real-time data it needs. You’ll make reliable decisions and be able to extend the favor to other companies that want to verify employee information. Access to the latest data also helps companies deliver more personalized customer experiences and increase satisfaction ratings.
Reasons to Outsource
Your job is to run a business as profitably as possible. Processes like income verifications aren’t negotiable but can expose your company to undesired consequences. These procedures also take time and resources away from what you do well. Working with income verification experts helps your business deliver seamless experiences while safeguarding against risks.