Imagine this – You receive a routine invoice from your assistant for a vendor you have been working with for a long time. At a glance, everything checks out, from the logo to the format. When you are about to approve the payment, your bookkeeper notices a minute detail – your assistant’s email address is missing one letter.
This incident almost cost Shark Tank judge Barbara Corcoran, the founder of luxury real-estate company The Corcoran Group, nearly $400,000, highlighting just how easy it is you can fall prey to sophisticated email scams. Businesses worldwide lose billions of dollars a year just from fraud alone, and invoice fraud contributes an estimated amount of $280,000 to it.
The Growing Threat of Invoice Fraud
With digital transactions becoming a norm, invoice fraud is a growing threat to businesses. It involves using different techniques, such as impersonating legitimate suppliers and making the business pay for a non-existent bill, targeting companies with weaker internal controls to deceive the employees. The fraud often capitalises on the trust placed on routine payment processes and the lack of verification steps, leaving gaps for fraudulent activities to fall through.
Common Types of Invoice Fraud
Phishing Attacks
Phishing is one of the prevalent methods used in invoice fraud, where scammers manipulate the payment process by impersonating vendors. An example is the incident mentioned above that almost cost Barbara Corcoran $400,000 with just a missing letter in the email.
In 2023, phishing attacks saw a 2% increase, with a staggering 94% of cyber decision-makers having to deal with phishing attacks.
Duplicated Invoices
Duplication of invoices can occur either accidentally or intentionally. In cases of intentional fraud, the scammers deliberately send the same invoice twice, hoping the company fails to notice and pays for it the second time. This is common for businesses with large volumes of invoices and generate multiple billing invoices across vendors that lack the process of cross-checking.
When invoices are paid more than once, it not only leads to financial loss for the company but also harms the reputation of the company as demonstrates operational inefficiencies and damages vendor relationships.
Alteration of Existing Invoices
This fraud happens when scammers are able to get hold of a legitimate invoice and tamper it, manipulating the payment details, amount, or product quantity without detection. It is usually done subtly to bypass any standard checks by the employees.
False Invoicing
False invoicing occurs when companies are billed for goods or services that have never been provided. Scammers mimic invoices, putting up legitimate-looking logos, names, addresses, etc to avoid detection.
One of the biggest cases of false invoicing was when a scammer was able to scam Facebook and Google into paying over $123 million by posing as a hardware vendor over three years.
Another notable case is a Singaporean woman who created fake invoices and scammed 2 companies S$25 million over 2 years for her renovation and interior design business.
Protecting Your Business from Invoice Fraud
Conduct Regular Training
Regular training can force employees to stay alert and recognise suspicious emails from the get-go. Early detection can prevent significant time and money that could be wasted if not identified.
Monitor Transactions Regularly
Performing routine checks can help businesses detect discrepancies in their invoices such as unusual amounts and any form of duplicated payments.
Implementation of Digital Tools
Digital tools are powerful assets that can help to track invoices in real-time and detect any inconsistency in transactions. These tools can identify duplicated invoices and differences in invoice details, reducing the risk of human error.
E-Invoicing is one of the ways to prevent fraud as it streamlines the entire process and adds a layer of security with its encrypted transactions. This not only enhances the security of the business but also prevents safeguard businesses from risking their reputation. Companies such as Zetta Solution, Xero, Datapost, Sesami, etc are Peppol-ready solution providers that offer seamless integration of E-Invoicing capabilities.
Cross-checking invoice details
Each invoice should have a unique order number which can help to ensure that the details on the invoice match with the order. Ensure that the name, address, quantities, and amount are tallied, and any discrepancies should be raised immediately.
Early Detection Matters – Talk to Us Today!
Prevention is better than cure. Taking proactive steps to minimise the impact of invoice fraud can prevent any significant financial losses and swiftly stop unauthorised transactions from processing.
Tools such as e-Invoicing can enhance the security as e-Invoices are not easy to tamper with. By implementing the right measures and systems, businesses can be more assured that they will be able to combat invoice fraud, ensuring long-term stability and success.
Don’t wait till it's too late! Secure your business today, reach out to us at sales@zetta-solution.com and find out how we can help you secure your invoicing system with peace of mind.
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