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What are Invoice Frauds and How to Avoid Them

It starts to get fascinating when you study the methods and techniques employed by fraudsters to dupe people around the world. It is not wrong to say that these people are intelligent beings. Committing frauds takes courage and the brains and these people have plenty of it. One of the products of such brainstorming is invoice frauds.

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What are invoice Frauds?

At the basis of it, the invoice fraud is simple. The scammer first identifies a business and learns about its common suppliers. He will create some invoices impersonating the regular supplier and send the fake invoice to the business. The invoices usually ask for immediate payment in the name of payment overdue.

The business doesn’t bother to check the exact details of the invoice and sends the money. An easy win for the scammer.

In frauds like this, the invoices are for common items like stationery or some petty items. It is easy to see why the accounts payable department does not bother to check the details closely.

This is the fraud. It is hard not to find this fraud laughable. Some ignorance and it’s like setting fire to your money. Just because of lack of due diligence you become the targets for fraudsters.

How to Prevent Such Invoice Frauds?

It should be noted that while these frauds are common, the prevent them is extremely simple. Just follow some basic guidelines and you will be safe. Here are 3 ways you can save yourself from invoice frauds-

Get Information and Inform

One of the easy ways to know about such frauds is to keep yourself updated. Check your local business bodies for regular updates. If there are new frauds popping up in your area, at least you will have some initial data for it.

Once you get the details and know exactly what the fraud is, teach about it to your team. Get all the guys under the same umbrella. Tell them how to avoid it and what to look for. Your chain is as strong as your weakest link so make sure everyone is clear on what to avoid.

Have a Matching System in Place

If you know about the Ronald Rutman, then you know what we are talking about. This was also the case of invoice fraud but at a bigger level. These could have been prevented if there was a proper matching system in place.

This is relatively simple to implement and should be implemented if you haven’t already. Have a 3-way document matching system in place. The invoice you receive should be matched with the invoice, a purchase order (PO), and a receipt for products.

Do Things the Right Way

In most small businesses, the AP department is not given priority and they are usually playing the catch-up game. This forces them to work hastily and not pay attention to the authenticity of the small value invoices.

It is important to make them understand small frauds like these can be avoided by working professionally and doing the things the right way.