15 Steps to avoid invoice fraud.

Operations Director – James Salmon – 8th April 2019.

SMEs are being hit by a rise in Invoice Fraud.

Barclays Bank research shows that one in seven UK SMEs have paid fake invoices in the last year, with over a quarter of those saying invoice scams resulted in losses of more than £5,000.

Mike Cherry of the Federation of Small Businesses warned: “All too often businesses introduce cyber-defences only after they have been the victim of fraud or an attack, and this attitude needs to change.”

Tony Price of PwC comments: “We are living in a time where digital technology pervades everything a business does and as a by-product businesses are open to a range of new scams. The cyber-attacks and online scams we are seeing are becoming increasingly sophisticated and devious.”

James Maycock of KPMG said: “Individuals who have the inside track on a business can often exploit loopholes in financial procedures to their advantage, and the repercussions for a business, particularly smaller businesses, can be devastating.”

15 steps to avoid invoice fraud.

The purchase ledger department is increasingly becoming a prime target for fraudsters. Automated processes and thoughtless actions can leave you exposed to clever schemes.

What steps can you take to prevent criminals exploiting  your business through phony invoices and diverted payments.

Invoice fraud is not only frustrating but can be costly. However by implementing a few simple tips, you can significantly reduce the risk of your company becoming a victim.

1) Use 3-Way Matching

If you can match each invoice to a purchase order and receipt of goods, then you’re much less likely to pay a fraudulent invoice. Most fraudsters won’t bother fabricating three separate documents.

2) Watch Invoice Amounts

Amounts on invoices can provide clues that an invoice isn’t on the up-and-up. If your company requires additional authorisation for invoices over £1,000 (for example), checks squeaking by right under that threshold (such as £999.98) should raise suspicion.

3) Keep Up Moral

Invoice fraud can as easily come from inside the company as from an outside source. Happy employees are unlikely to commit fraud and more likely to catch fraud from outside sources. If they don’t have reason to complain, then they’re more likely to care about doing right by the company.

4) Check On Suppliers

Fraudulent invoices are usually either issued under fake business names or use a legitimate name but a fake address or bank account number. You’ll want to look up any new supplier to make sure they’re legitimate and find the address on Google maps. If the address is residential or a post-office box, that’s a big red-flag. Also, check-in with your existing suppliers directly, using their existing contact details if you receive a notice of a change of address or bank account. Where possible

5) Track Invoice Activity

If you’re tracking invoice activity, you’ll be able to notice when something changes. For example, if one supplier typically submits 5 to 10 invoices a month and suddenly you see 50 from them in a single month. It might be legitimate, but you’ll still want to get in touch with them and double-check.

6) Implement “Fuzzy Matching”

Duplicate payments are one way to commit invoice fraud – fraudsters submit a near-perfect copy of a legitimate invoice and hope no one notices one payment is going to a different account number. Sometimes they’ll also change date, invoice number, or amount. You’ll need a program or system that allows for “fuzzy matching” to catch near-duplicates as well as identical invoices.

7) Multiple stage authorisation

Where practical, have more than one person responsible for authorising payments. Perhaps have one person authorising the invoice and another authorising the invoice. Have authorisation by the person or department responsible for the expenditure. The more eyes checking an invoice and payment, the more likely someone will spot the fraud.

8) Don’t let invoices build up.

The more time between the supply and the invoice authorisation, the  harder it is for the authoriser to notice discrepancies.  Also the more outstanding invoices pile up, the more likely that authorisation will be done in a rush without the proper checks. If a manager has to sign off 100 invoices instead of 10, will re really give them the same attention?

9) Check statements from suppliers

Check promptly when statements from suppliers arrive. If you have a paid an invoice but the supplier is still chasing it, check it quickly as the payment might have been diverted.

10) Don’t be pressured

Don’t be pressured into processing payment without carrying out checks. Fraudsters may try to inject urgency – for example, by threatening late delivery or some other negative impact on your business. Don’t be fooled by this. A genuine supplier will understand the need for vigilance.

11)Carefully Scrutinise

Carefully scrutinise all invoices you receive – there may be subtle but noticeable differences – such as mis-spellings, a blurred logo or one with slightly different colours; the inclusion of bank details where none had been stated previously; a different email address with small changes (.com or .org instead of .co.uk); a new signatory; changes in the amount invoiced; changes in the method used to request payment; a different contact name or phone number for correspondence, etc. Train yourself and others to spot the signs.

12) Big payments
For big payments, insist on meeting or talking to a designated point of contact first – so you’re sure that the right account is credited.

13) Send Confirmation

Always send confirmation – let suppliers know when you’ve made payment and what account you’ve credited by sending a confirmation email to designated contacts.
Think security before publishing details of your suppliers online – while transparency is a good thing, by advertising who supplies goods and services, you’re making it easy for fraudsters. Is it really necessary to publish their names so openly?

14) Maintain security

Maintain security – don’t leave invoices on your desk or screen unattended and never in public view.

15) Reconciliations

Reconcile accounts regularly and match expenditure to your budget – so potential fraud is detected more quickly.

See our blog 20 ways to avoid identity theft

CPA care about getting the correct payments made promptly

The Credit Protection Association care about making sure the correct payments are made promptly.

Formed in 1914, CPA has been providing credit management services to SMEs for over 100 years.

At the Credit Protection Association, we provide first class credit information that can help you verify the addresses and identity of your customers and suppliers.

Our monitoring service can flag up warning signs long before the end, giving you the chance to adjust and reduce your exposure. We provide recommended credit limits and credit scores on a traffic light system and can help you set appropriate credit policies for your customers.

If you supply to businesses on credit help us help you identify the risks.

Why use a third party collector?

As a third party collector, we can also get your payments prioritised over those who are not as hot on collections. When you customer receives a letter from the Credit Protection Association regarding their outstanding account, they are going to want to get that resolved as a priority. Our overdue account recovery service can get your unpaid invoices to the top of their “to do” list and get your invoice paid.

Over the years we have collected billions in overdue invoices for our customers.

Our debt recovery and credit management services give our members the financial freedom needed to grow and prosper, while our new Late Payment Compensation department could unlock hidden potential and offer the compensation needed to springboard your business to success.

Do you realise you may have hidden capital tied up in your business?

No need to run to banks of other finance providers

Do you realise you may have a hidden source of capital within your business waiting to be activated?

If you trade with other businesses and were often paid late then you could be entitled to significant compensation.

Under little known and underused legislation your business could be due huge amounts in compensation that you didn’t even know about.

That compensation could be the cash injection your business needed.

How can CPA help?

CPA has developed a unique technology to dig into your accounting records and discover the cash injection you are due by means of compensation. The software does all the hardwork. Our software interacts over the cloud with over 300 different software packages, working directly with your accounts package, just so long as it’s stored on a computer.

The Credit Protection Association plc (established 1914) has spent 3 years researching the accounting, technical and legal implications of Late Payment Legislation and our staff and retained solicitors probably have as much working knowledge of this legislation as could be found anywhere.

We recognise that most companies do not have the resources to spend time on the identification and calculation of Late Payment Compensation. Our service can produce an Analyses within just a few days with (usually) less than 30 mins of co-operation from our clients. We work directly with over 300 accounting packages but can also work with bespoke accounts packages. Indeed, speed is essential as the oldest invoices may fall foul of the 6-year time limit.

Once the Sales Ledger Analyses is made available to clients, all that is required is that management decide which commercially sensitive ex-customers to remove from the list and return it to us.

CPA then uses its years of collection experience to explain and recover the Late Payment Compensation Claims. Clients do not handle any part of the recovery process as our team will take all communications from the companies against who the claims has been made. Often, it’s simply a case of explaining the legislation, sometimes we have to go all the way and enforce the legislation through the courts.

The result is that we are realising clients’ claims worth tens and sometimes hundreds of thousands of pounds which, of course, is pure net profit.  You may also be among the recipients of “hundreds of thousands of pounds” should you elect to take advantage of our services.

We do the work, you receive the cash.

If you have supplied goods and services to businesses on credit and were regularly paid late then you could be due significant sums in late payment compensation.

We are talking to companies and unearthing claims in the hundreds of thousands from former business customers who paid them late. Large business customers who abused their power to inflict unfair and sometimes illegal payment practices.

We are helping companies that were looking to close down, who looked insolvent and finding that cash injection they need to avoid insolvency.

CPA is passionate about late payment

The Credit Protection Association has been protecting smaller firms against poor payment practices for over 100 years.

We are passionate about breaking the late payment culture that holds back the UK economy and threatens many SMEs with cash flow difficulties being the single biggest killer of Britain’s small businesses.

If you were regularly paid late we can help. Those former customers used you to boost their own cash-flow, regularly paying you late.

As a result you had extra costs, you had the distraction of having to chase payment, you had opportunity costs because your capital was tied up in their late invoices.

Under little used legislation, you are entitled to compensation for those late payments.

Now you can boost your own cash-flow.

CPA can help unearth the those hidden treasures.

We have the technology to reveal the compensation you are due and we have the extensive experience and expertise to then turn those claims into cash.

Yes, CPA can help you boost your business cashflow.

Don’t let your bankers control you,  contact CPA today.

Read our blog here on how to crack down on the late payment culture.

Read our blog here on how to give late payers the slap they need.

visit our late payment compensation page

See our full blog and FAQ on late payment compensation

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0330 053 9263

The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!

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