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2 tips to avoid falling prey to fake invoices


This article on protecting your company from fraudulent activities was originally published in March 2016. All relevant copy and statistics have been updated as of December 2021. 

In March 2016, we talked about a story that ran rampant in the news about a drug company boss facing jail time for submitting more than £3m worth of doctored client invoices. Another story blew up about a hotel manager convicted for falsifying documents worth £350,000

It’s hard to imagine how such an extreme amount of money could be swindled under your nose, but the reality is that this kind of activity is more common than you might think. Studies have found that more than 40% of businesses in the UK have received bogus or fake invoices. 

Fraudsters continuously target companies and trick them into sending payments to suppliers who don’t exist. Employees with a vendetta siphon money into separate accounts, lining their pockets with their company’s money. People overseas take advantage of consumers, pocketing cash through order payments that never clear. 

It happens more than you might think.

Scams and fake invoices are quite common, meaning organizations and individuals need to take pro-active steps to protect their sensitive information. In the business world, this takes the form of implementing firewalls, password practices, and other security measures to identify fraudulent activity. Interestingly, organizations are slower to take similar protective measures when it comes to their invoices. 

Flagging fraudulent activity can be difficult and very time-consuming, no matter the size of your company or supply chain. Put simply; businesses need better controls, checks, and visibility into their supply chains, suppliers, and payments. 

Let’s assume that businesses are taking the basic and necessary precautions to protect themselves from fraud. This means that:

  • They’ve checked to see whether their supplier is registered
  • They’ve verified endorsements
  • They’ve scrutinized their website to ensure it is legitimate

From here, there are 2 additional steps Tradeshift recommends all companies can do to further de-risk their invoicing process

  1. Educate teams

Take the time to educate employees who handle sensitive information. What are the various kinds of invoicing scams that are out there? What sorts of payment patterns are cause for concern? And what is the process for when fraud is detected? To identify and protect your team from fraud, you need to equip them with the knowledge and tools to successfully fight it. Some key flags to watch out for include:

  • Invoices that are a round dollar amount
  • Duplicate invoice payments
  • Paying the invoice straight away
  • Failing to match invoices
  1. Create a digital action plan

Creating an action plan for when issues arise. Who is the next in the chain of command when fraud is detected and  what is the process for reporting suspicious activities?  With the right digital tools your company can gain insight into the current state of your supply chain and spot fraud before it hurts you.

Tools like e-invoicing help you screen for and flag errors and omissions in your invoices so that you can be certain inaccurate information is not being processed. This gives you peace of mind while also giving you access to a consolidated platform of data, granting you more visibility and control over your supply chain activities.

Businesses with updated tools and processes find it much easier to find unusual activity, seeing as they don’t have a mound of paper to dig through. Instead, all the information is accessible online at the tip of their fingers. What’s more, by connecting with suppliers over a B2B marketplace, businesses can also build a supplier checklist for them to effectively validate themselves – somewhat mimicking a LinkedIn profile. If suppliers don’t tick off specific criteria, companies know to avoid doing business with them. Having a one-stop shop for supplier data makes it much easier for businesses to review supplier lists and ensure information is updated regularly. 

 While we can never fully predict payment risks, we can certainly do more to prepare and avoid them. Tradeshift’s digital tools are here to help you protect your business and create an efficient, safe supply chain process. For more information about how we can help,  reach out to our team today

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