How to Prevent Invoice Fraud When Making Payments - ByteScout

How to Prevent Invoice Fraud When Making Payments

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Over 47% of SMEs in the UK have reported invoice fraud, with losses totaling over £9bn. Moreover, Barclays Bank reported that over 14% of its customers have lost at about £5,000, to invoice fraudsters. The good news is invoice fraud is preventable. Read on to discover how to prevent invoice fraud.

Prevent Invoice Fraud When Making Payments

10 Ways to Prevent Invoice Fraud in Business and Organizations

Process Invoices on Time

Do not let invoices pile up, and they process them in big batches. Doing that can overwhelm whoever is doing it, and cause them to overlook important details such as email addresses, phone numbers, and banking details.

It is easy to rush when you have 200 invoices to process in s day. And it gets worse if it is the end of the month. On the other hand, processing ten invoices within 8 hours will put anyone under undue pressure.

Don’t Review Invoices under Pressure

Fraudsters often put a certain level of urgency when requesting payments. Their goal is to always withdraw the funds as soon as they hit their bank account. In that regard, you should never hasten to approve and pay invoices.

Genuine suppliers will give you ample time unless the invoice is long overdue. They always focus on getting more business from you, rather than annoy you with requests for fast invoice processing.

3-Way Matching

Most fraudsters only take time to fabricate an invoice. However, few will go all the way and do the same with a purchase order (PO), and receipt of the invoice. Matching a PO, receipt, and invoice can help you to detect and stop many cases of invoice fraud.

Defer Payment for a Few Days

In that regard, not treating any changes to payment details as a routine procedure is important. A thumb of rule is to delay payments, once such changes have been requested.

That allows suppliers to raise queries about their payments. They also get ample time to respond to your queries about the change in their banking details.

Watch Invoice Amounts

Keep a close eye on any invoice amounts that are close to the payment threshold that needs approvals. In that regard, if an invoice of over $1,000 needs approvals, then invoices of $900 to $999.99 should raise suspicion.

Employee Welfare

You need to keep your employees happy, and content with their job. Happy employees are less likely to defraud the business, and they can help to stop invoice fraud. On the other hand, disgruntled employees will care less about the company’s welfare.

Review Your Suppliers’ Banking Details

When you receive an invoice from new suppliers, confirm whether they are not using a Postal address or residential address. Fraudsters often don’t have a business address, or they will use a postal address.

You can confirm the address using Google maps. If an existing supplier requests a change of banking details via phone or email, you must confirm that request using their existing methods.

You must also request them to confirm the change using their existing contact details on your file. Often, fraudsters will use the correct name, but change the address, bank details, and email.

Track Invoice Status

Always keep an eye on the number of invoices each supplier sends you weekly, bi-weekly, or monthly. A sudden spike in the number of invoices received is a red-flag. Even if they send an extra invoice than they normally do, you should contact them immediately.

It could be they made additional suppliers, and it could also be someone who has sent an extra fraudulent invoice.

Invest in Fuzzy Matching Software

You need to watch out for duplicate invoices or invoices that closely match the originals. If you process a large number of invoices per month, you can invest in a Fuzzy Matching Software.

The software can optically detect small changes that can easily escape the human eye. Such changes include font, digits, characters, and words. It can catch near-duplicates as well as duplicate invoices.

Invoice Authorization

Invoices should never be approved by one person only, especially, when there are lots of them. You can have two or more people check the invoice against PO or receipts.

Moreover, invoices must be treated with a point of weakness, rather than a routine procedure. Update supplier using details in the file, rather than those on the invoice, when processing their payment.

Conclusion – Stop Invoice Fraud

It is easy to stop invoice fraud if you take time to review invoices against POs, receipts, and other information on your customer’s file. Training your employees to detect fraud can also help you to minimize internal and external fraud.

We hope you found this invoice fraud to be informative, and engaging. And you will take the steps outlined above to reduce cases of invoice fraud.

You can see how to detect fraud with PDF.co Document Parser HERE.

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