Invoice fraud, which affects one in three companies, involves deceitful practices designed to deceive businesses into making payments to fraudulent accounts.
As fraudsters refine their techniques, it’s important for businesses to understand how they operate and the potential impact on their daily operations.
To help you understand what methods fraudsters use, here are their most common techniques:
- Business email compromise (BEC) – With this method, scammers gain unauthorised access to or mimic a legitimate business email account. Subsequently, they send emails that mimic trusted suppliers or senior executives, demanding immediate payments to newly designated bank accounts.
- Change of bank details – Fraudsters impersonate genuine suppliers and notify companies of a modification in bank account information. Unaware employees subsequently update the payment details, redirecting funds to the fraudster’s account.
- Fake invoices – Fraudsters fabricate invoices that mimic authenticity. They often utilise information from legitimate suppliers, blurring the line between genuine and counterfeit invoices.
- Phishing attacks – Fraudsters employ phishing emails to deceive employees into disclosing sensitive information, such as login credentials or financial details, which they subsequently exploit for fraudulent purposes.
While these tactics might seem simple at first glance, they often involve complex and elaborate schemes with multiple layers of deception.
The impact of invoice fraud
Invoice fraud causes companies to lose money immediately by paying into fraudulent accounts, which are often very difficult to recover.
It also triggers time-consuming and resource-intensive investigations into the fraud, disrupting business operations and delaying legitimate payments.
Additionally, becoming a victim of fraud can harm a company’s reputation, eroding trust with clients, suppliers, and stakeholders, and may lead to legal consequences such as fines and scrutiny from regulatory bodies.
Strategies to protect your business against fraud
We suggest protecting your company from invoice fraud by putting the following strategies into practice:
- Awareness training – Train your staff on the common fraudster tactics we mentioned above and the critical need to verify payment requests. Conduct regular training sessions to empower employees in identifying and addressing potential threats effectively.
- Conduct audits – Regularly review your accounts payable procedures and supplier information through audits. This practice can uncover any anomalies or inconsistencies that might signal fraudulent activity.
- Divide responsibilities – Assign financial responsibilities to multiple employees. This approach helps to detect and prevent fraudulent activities effectively.
- Strong verification processes – Set up rigorous verification procedures for any alterations to payment details. Always confirm new or revised bank account information directly with the supplier using a recognised and trusted communication method.
- Technology – Integrate fraud detection software capable of identifying unusual payment requests or alterations in supplier information. Maintain secure and up-to-date email systems to safeguard against Business Email Compromise (BEC) attacks.
Reach out to our team if you have concerns about this issue – we can assist you in establishing strong financial checks to enhance your protection.
Contact us for further details.
