How to avoid a fraudulent invoice

How to avoid a fraudulent invoice

Yes, fraudulent invoices are a `thing` and, unfortunately, have been for some time.  This is one of the main reasons why you need to continuously monitor your credit control procedures and systems at all times, protecting your company at all costs. 

Doctoring client invoices or falsifying documents can be big business.  With estimates that over three-quarters of UK businesses have fallen victim to fraudulent invoices, you must take the right precautions. 

What is invoice fraud? 

Invoice fraud is where an opportunist criminal will try various ways to trick businesses into paying false invoices. 

These invoices may be completely made up, or they may copy a real invoice and simply change the bank details! 

Biggest scams to be aware of 

Two of the most prolific scams affecting invoice collection are: 

Malware – digital scams using malware continues to grow in their presence and sophistication.  Infecting your IT systems and allowing cybercriminals to spy on certain emails.  Stealing contact details and then using these details to contact these businesses themselves with fake invoices asking for money. 

CEO fraud – in these instances, a criminal pretends to be from the company you have been working with, often emailing a junior or new member of staff; these criminals will then go on to ask for payment or further details. 

Fake invoice, it’s a fraud 

Below we’ve provided some hints and tips of things to look out for and put in place to help you and your teams identify invoice fraud. 

Check your suppliers are who they say they are.  Do your research on the company; for example, do they have a real trading address that you can check out?  Are the contact details correct? Does the contact telephone number work?  Do they have any positive testimonials online from others they work with? 

Train and update your teams on fraudulent activity.  Educating your staff on the various invoicing scams and the most common things to look out for (such as a blurry logo attached to the invoice. Possibly a change in account numbers, changes to contact details – even ever so slight, invoices rounded up to the nearest pound, duplicate copies sent, second or even third copy invoices received, etc.), is vital. 

Do you have a fake invoice process in place?  I.e., if a fake invoice is spotted, what is the next step?  Who do you report it to, when, and who should notify your bank?  Who is responsible for actioning the process? 

Can you swap from paper to digital?  Electronic invoices can flag errors much more accurately and spot problem invoices before they become just that….a problem.  Digitalisation also helps to flag any duplicates as they come through the system and reduce payment errors. 

Keep your supplier information in one place and regularly up to date.  This allows you to check any changes in contact details, addresses, etc. 

Telltale signs to help you spot a fraudulent invoice 

  • The email you have been sent doesn’t look quite right.  Maybe there is a very subtle spelling mistake, or the domain has changed from .com to .org – make sure to carefully check email addresses. 
  • If you receive an unexpected invoice, check it out. Don’t open invoice attachments you’re unsure about, as these can often contain viruses and spyware.  Instead, contact the supplier, using the number you have on file, not on the invoice you have received, to confirm.
  • Make sure all anti-virus software is up to date, scanning all emails and attachments before they can be opened and, of course, cause problems. 
  • Confirm any changes, i.e., changes to bank details, contact details, etc., direct with the client. 
  • Never reveal bank details or pass on sensitive information to parties you don’t know. 
  • Look at potential cloud platforms so you can have access to real-time data on your suppliers, their contact details, information, and more. 

By implementing the right controls and improving your credit management processes’ visibility, you can reduce the risk of fraudulent payments. 

Working in the finance and credit management sector, we make it our job to be aware of all the latest invoice frauds.  Protecting our clients and ourselves against such activity, so we can continue to work hard on chasing unpaid invoices for our clients. 

To find out more details on how we can improve your invoice collections today, call a member of our friendly team on 0330 229 1991