Invoice fraud is one of those things that you never imagine will happen to you, but when it does, you wish that you’d taken steps to prevent it.
It’s a bit like home insurance in that regard. People will often put it off thinking that they don’t need it, only to come back from holiday to find all their belongings stolen.
Invoice fraud is becoming increasingly prominent in the UK. Data suggest that it’s growing at around 130 per cent and that an increasing number of businesses are falling victim. Part of the reason for this is how easy it is to carry out. Most companies have sophisticated anti-phishing policies and antivirus to prevent penetration of their online systems but don’t have the same modern systems to prevent paper-based fraud. For criminals, it’s an opportunity.
How Does Invoice Fraud Work?
Invoice fraud is surprisingly simple. Fraudsters recreate what looks like an official invoice but change the bank details to theirs. When you go to pay the invoice, you inadvertently send the fraudster the money instead of the legitimate recipient.
Invoice fraud isn’t just something that affects large businesses. Figures show that small and medium size businesses in the UK collectively lose £28,000 per day to invoice fraud. According to UK Finance, companies lost £93 million in total in 2018 due to this one fraudulent activity alone. Being small, therefore, is no guarantee that you’re safe.
How To Ensure You Aren’t Subject To Insurance Fraud
Over the years, fraudsters have developed several tricks to get you to pay them money you do not owe. While subtly changing the bank details is one such strategy, there are a whole host of others.
A common trick is to use a false email address. A fraudster poses as somebody you trust, like a supplier or the CEO, and then sends an invoice from this address. The invoice looks as if it comes from a legitimate source, and so the finance team processes and pays it, even if it is entirely bogus.
Fraudsters also like to inflate the VAT amount on their invoices. While VAT is 20 per cent, some will top it up to 22 or 25 per cent and hope that your busy finance department will not notice and pay the whole lot.
Finally, fraudsters may duplicate an invoice or send the wrong totals in an attempt to get you to pay more than you owe. These are real risks that companies face every day.
Use An Invoice Checking Service
The good news, though, is that there are tools that you can use to fight back. Check an Invoice, for instance, is a simple online service lets you upload your invoices to check their validity. All you do is log in to your account, upload the invoice, and then Check an Invoice will scan it and report any potential threats. After a couple of minutes, you’ll get the invoice back again with any potential issues highlighted. You’re then free to review the risks and either take action or dismiss them and pay the invoice.
What’s nice about the service is that it offers companies an additional level of protection. It is, in a sense, a bit like home insurance – it’s something that you can have ticking over in the background to ensure that your company stays safe. You pay a small premium up front and, in return, you get protection against handing large sums of money to the wrong people.
Criminals know that invoices are a weak link in your security strategy. Most companies don’t use invoice checking services, making them an easy target. Finance departments have to process hundreds of invoices every day. It’s not always possible for admin personnel to verify every invoice, let alone check all the details.
Worse still, checking is a time-consuming process. A member of your finance team might notice, for instance, that the bank details for a particular supplier have changed since the last invoice. But, of course, that change could be entirely legitimate. That member of staff then has to contact the supplier and confirm that indeed, the details have changed. There’s often no indication that it is a fraudulent document. Checking each invoice manually is a drag on your efficiency.
Services like Check An Invoice help to cut down on the amount of time your staff spend processing payments dramatically. It makes checking for abnormalities easy and directs your team to investigate potentially problematic invoices further. Is it time you started protecting your business against this type of common fraud?