Middle-market businesses lose an average of almost $300,000 annually to invoice fraud, according to a recent survey by software company Medius and researcher Censuswide. Invoice fraud can be challenging to spot — and even more difficult to recover from — but your company can take steps to prevent it from happening.
The most common type of invoice fraud is fraudulent billing. In billing schemes, a real or fake vendor sends an invoice for goods or services that the business never received (and may not have ordered in the first place).
Overbilling schemes are similar. Your company may have received goods it ordered, but the vendor's invoice is higher than agreed upon. Duplicate billing is where a fraud perpetrator sends you the same invoice more than once, even though you've already paid.
Employees sometimes commit invoice fraud as well. This can happen when a manager approves payments for personal purchases. In other cases, a manager might create fictitious vendors, issue invoices from the fake vendors and approve the invoices for payment. Such schemes generally are more successful when employees collude. For example, one perpetrator might work in receiving and the other in accounts payable. Or a receiving worker might collude with a vendor or other outside party.
To stop invoice fraud and perpetrators from succeeding in their schemes, take the following four steps:
Even if you take all precautions, invoice fraud may occur. If you discover a scheme in progress, act quickly to minimize the damage. Notify your bank or credit card company to stop payment on invoices that haven't yet been paid. And if you intend to file an insurance claim or want to pursue criminal charges, be sure to file a police report.
We can help you and your attorney build a case against a suspect by gathering and analyzing fraud evidence and even testifying in court. Contact us if you need assistance or have questions about invoice fraud.
Get in touch today and find out how we can help you meet your objectives.