Protect Your Business from Invoice Fraud – Tips for Business Owners

UK businesses suffer more than 3,000 cases on invoice fraud annually, with an average cost of £28,000 per victim. Learn why, and how to ensure your organisation doesn’t fall victim.

According to a survey conducted by the banking industry trade body, UK Finance, more than 40 percent of businesses in the UK are unaware of the risks associated with invoice fraud. These scams cost British businesses almost £93 million in 2018 alone, and the problem is growing. Overall, the annual case rate exceeds 3,280 invoice and bank mandate scam cases throughout the year, with an average loss of more than £28,000 per victim.

It is estimated that invoice fraud costs organisations around the world up to $24 billion per year, but how can you protect yourself from this type of fraud? This blog outlines the basics of invoice fraud and how to prevent your organisation from falling victim to cyber-criminals. By learning about the different types of fraud that are out there and taking precautions to avoid them, you can safeguard your organisation from potentially catastrophic losses. Keep reading to learn more!

The Basics of Invoice Fraud

Business owners are always on the lookout for ways to save money, and fraudsters are no exception. One of the most common ways fraudsters steal money from businesses is through invoice fraud. Invoice fraud means fraudsters fraudulently invoice businesses for goods or services that have not been provided in order to steal money.

This can take various forms, such as submitting a fake invoice, spoofing you into accepting them as a genuine supplier, sending payments to false bank details, or online payment fraud. To avoid becoming a victim, make sure you know the basics of invoice fraud and how to identify and avoid these types of scams. In the UK, this type of scam is very common, and is estimated to cost businesses £2.5 billion each year.

Invoice fraud vs. mandate fraud?

Mandate fraud is where fraudster tricks someone in your organisation into changing details of a direct debit, standing order or bank transfer by pretending to be an organisation to which you make regular payments. Typical examples include regular suppliers, or other bodies where there’s a routine subscription. It’s a particularly easy scam to pull off.

Invoice fraud is similar to mandate fraud, but differs in that it focuses on submitting a variety of fraudulent invoices to organisations, often for quite trivial sums of money. Examples include offering falsified information on invoices, placing unauthorised charges on an account, making unauthorised changes to an invoice, overstating the value of goods or services provided. However, the most dangerous scam entails the creation of fake contracts or emails to appear as if they are from a legitimate vendor and then submitting corresponding invoices.

What size of organisation is susceptible to invoice fraud?

All organisations are susceptible to invoice fraud, according to Katy Worobec, managing director of economic crime at UK Finance. As she explained, “The gangs responsible for this kind of fraud are getting more and more sophisticated, and they frequently obtain information that enables them to pass off as trusted suppliers.”

Always confirm with that supplier separately, over the phone or in person, using the contact details you have on file, if someone contacts you asking for a supplier’s bank account details to be changed.

Can your finance team spot a scammer?

In order to succeed, criminals prey on businesses by pretending to be regular suppliers and asking them to change their bank account information, frequently via email. Then, businesses are duped into sending funds to the fraudster’s account rather than the legitimate supplier. In order to make their actions seem more credible, criminals frequently try to obtain information from businesses, such as the day that regular payments are due.

If it’s your first time paying into an account, we advise transferring a small amount first and then confirming with the business using known contact information that the payment has been received and that the account information is accurate. If you believe you may have been a victim of an invoice or mandate scam, immediately contact your bank and the police Action Fraud team.

What information is at risk?

Cyber criminals can exploit your bank account number and sort code so they can submit a request for you to change the payment details for a legitimate supplier and thus direct payments to the fraudster’s bank account. Even large businesses can fall victim to such a ploy, but small businesses are at greater risk as their accounts payable staff are often less sophisticated or experienced.

Phishing emails are more complex, and they might start by appearing to be innocent requests from a known supplier merely requesting confirmation of their account number. A suspicious email is almost any communication requesting further information from a regular supplier claiming to want to double check the documentation you hold.

Phishing, especially once a rapport has been established with a particular user, often leads to the submission of email attachments which seek to amend bank account numbers. This type of fraud can only be combatted effectively by utilising an accounts payable automation software suite which validates any such request automatically.

How to Avoid Invoice Fraud

To protect your organisation, take the following precautions: first, confirm that all information on the invoices is correct. Next, use a secure email connection to transmit invoices and set up an anti-fraud algorithm in your accounting software. Finally, keep track of payments made and any irregularities so you can take action if necessary. By doing these four things, you can reduce the chances of becoming a victim of invoice fraud.

Some organisations at a heightened risk of invoice scams due to the high volume of transactions and the fact that fraudsters can often identify weak points in such businesses and target them for attack. The construction industry is especially susceptible to paying a fake invoice, but by understanding the risk factors, you can protect your business from fraudster attacks.

There is, however, only one approach to preventing invoice fraud and that is to adopt a dedicated accounts payable automation platform. Check out the video above to see how this can work.

How does Software Automation Prevent Invoice Fraud?

Using software to make your accounts payable process so robust that invoice fraud is eliminated is now within reach. The global leader is YOOZ, and it’s so efficient that it’s used and recommended by the world’s Top 5 accounting corporations.

Because YOOZ has been deployed by more than 100,000 companies, and the software has processed more than 100 million invoices, clients gain an unprecedented level of cloud-learning: the software automatically validates payment details, thereby preventing most invoice fraud.

With robust three-way invoice validation, it’s impossible to pay a duplicate invoice, and you have 100 percent certainty that any invoice is matched against a valid PO number or, failing that, an absolute approval workflow check.

Of course, the fact that YOOZ automates 80 percent of the accounts payable process makes implementation a business essential.

Frequently Asked Questions

How can I prevent my business from being a victim of invoice fraud?

Prevention of invoice fraud can be done through fraud prevention measures such as creating unique identifiers for each vendor and verifying the accuracy of the information submitted by the vendor. Additionally, businesses should use secure email to send invoice information and review invoices for any signs of fraud, such as excessive or unauthorised charges.

What steps can I take to protect myself from invoice fraud?

The most common steps to reduce the chances of becoming a victim of invoice fraud include: -Use a verified email address when submitting invoices -Store original invoices and payment vouchers in a secure location -Routinely check invoices for errors and fraud -Ensure that information entered into online invoice forms is accurate

How do I know if an invoice is legitimate?

There are several ways to determine if an invoice is legitimate and not fraudulent. The first way is to ensure that the invoice includes all of the required information. For example, an invoice must include the type of goods or services being sold, the vendor’s name, and the amount of the invoice.

Additionally, the invoice should be sent in a timely manner and should match the invoice number provided by the vendor. If any of these conditions are not met, it may be indicative of fraudulence.

Another way to determine if an invoice is legitimate is to compare it to other invoices from the same vendor. If there are any discrepancies, this may be an indication that the invoice is fraudulent. Finally, it is important to contact both the vendor and the bank that issued the invoice to confirm that the invoice is legitimate. If any of these conditions are not met, it may be indicative of fraudulence.

Using Technology to Prevent Invoice Fraud

A number of information tools have emerged to streamline business processes, helping to lessen the burden on people. Finance departments have more power to identify vendor fraud, such as duplicate invoices and fabricated bank information, when automation is used for accounts payable, as opposed to traditional manual methods. The growing use of electronic invoices, which is frequently required, goes hand in hand with automation.

Big Data (handling enormous amounts of data), machine learning (using artificial intelligence to create and use algorithms for predictive analysis based on precise data), and digitalization are frequently the most effective techniques (the core vector for implementing automation and deriving associated benefits).

These three elements are the by-product of corporate efforts to accelerate transactions, lower operating costs, and boost agility. Using these three elements, businesses can organise rigorous purchase-to-pay procedures that by their very nature provide accurate data, complete traceability, and reduced risk exposure.

They also get rid of laborious, mistake-prone, and possibly dangerous manual tasks. In other words, they can significantly improve service for transactions between legitimate customers and suppliers while addressing illegal payments to fraudsters. Intelligent software agents continuously scan patterns, vendor information, numbers, duplicate invoices, bank information, payment orders, and much more for anomalies.

Some organisations at a heightened risk of invoice scams due to the high volume of transactions and the fact that fraudsters can often identify weak points in such businesses and target them for attack. The construction industry is especially susceptible to paying a fake invoice, but by understanding the risk factors, you can protect your business from fraudster attacks.

There is, however, only one approach to preventing invoice fraud and that is to adopt a dedicated accounts payable automation platform. Check out the video above to see how this can work.

How does Software Automation Prevent Invoice Fraud?

Using software to make your accounts payable process so robust that invoice fraud is eliminated is now within reach. The global leader is YOOZ, and it’s so efficient that it’s used and recommended by the world’s Top 5 accounting corporations.

Because YOOZ has been deployed by more than 100,000 companies, and the software has processed more than 100 million invoices, clients gain an unprecedented level of cloud-learning: the software automatically validates payment details, thereby preventing most invoice fraud.

With robust three-way invoice validation, it’s impossible to pay a duplicate invoice, and you have 100 percent certainty that any invoice is matched against a valid PO number or, failing that, an absolute approval workflow check.

Of course, the fact that YOOZ automates 80 percent of the accounts payable process makes implementation a business essential.

Frequently Asked Questions

How can I prevent my business from being a victim of invoice fraud?

Prevention of invoice fraud can be done through fraud prevention measures such as creating unique identifiers for each vendor and verifying the accuracy of the information submitted by the vendor. Additionally, businesses should use secure email to send invoice information and review invoices for any signs of fraud, such as excessive or unauthorised charges.

What steps can I take to protect myself from invoice fraud?

The most common steps to reduce the chances of becoming a victim of invoice fraud include: -Use a verified email address when submitting invoices -Store original invoices and payment vouchers in a secure location -Routinely check invoices for errors and fraud -Ensure that information entered into online invoice forms is accurate

How do I know if an invoice is legitimate?

There are several ways to determine if an invoice is legitimate and not fraudulent. The first way is to ensure that the invoice includes all of the required information. For example, an invoice must include the type of goods or services being sold, the vendor’s name, and the amount of the invoice.

Additionally, the invoice should be sent in a timely manner and should match the invoice number provided by the vendor. If any of these conditions are not met, it may be indicative of fraudulence.

Another way to determine if an invoice is legitimate is to compare it to other invoices from the same vendor. If there are any discrepancies, this may be an indication that the invoice is fraudulent. Finally, it is important to contact both the vendor and the bank that issued the invoice to confirm that the invoice is legitimate. If any of these conditions are not met, it may be indicative of fraudulence.

Using Technology to Prevent Invoice Fraud

A number of information tools have emerged to streamline business processes, helping to lessen the burden on people. Finance departments have more power to identify vendor fraud, such as duplicate invoices and fabricated bank information, when automation is used for accounts payable, as opposed to traditional manual methods. The growing use of electronic invoices, which is frequently required, goes hand in hand with automation.

Big Data (handling enormous amounts of data), machine learning (using artificial intelligence to create and use algorithms for predictive analysis based on precise data), and digitalization are frequently the most effective techniques (the core vector for implementing automation and deriving associated benefits).

These three elements are the by-product of corporate efforts to accelerate transactions, lower operating costs, and boost agility. Using these three elements, businesses can organise rigorous purchase-to-pay procedures that by their very nature provide accurate data, complete traceability, and reduced risk exposure.

They also get rid of laborious, mistake-prone, and possibly dangerous manual tasks. In other words, they can significantly improve service for transactions between legitimate customers and suppliers while addressing illegal payments to fraudsters. Intelligent software agents continuously scan patterns, vendor information, numbers, duplicate invoices, bank information, payment orders, and much more for anomalies.

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