Protect Your Business from Expense & Invoice Fraud | ProSpend

TL;DR

Expense and invoice fraud — from fake supplier invoices to inflated expense claims, is a growing threat for Australian businesses. By combining clear policies, separation of duties, supplier verification, regular audits and modern automation tools, you can dramatically reduce fraud risk and protect your bottom line. Use this guide to build a layered defence before fraud strikes.

What Is Expense & Invoice Fraud?

Expense and invoice fraud occurs when a business pays for invoices or expenses that are falsified, duplicated or inflated — either by external scammers impersonating suppliers, or internally by employees submitting false or exaggerated claims. These fraudulent payments drain cash flow, damage trust with genuine suppliers, and expose your organisation to compliance and reputational risk.

Because both external “false billing” scams and internal expense abuse share overlapping control weaknesses, protecting your business requires a holistic, layered approach. 

Who This Guide Is For

• Australian mid-market companies (50–500 staff) with frequent invoice payments or expense reimbursements
• Finance teams using spreadsheets, paper invoices, or legacy systems especially those processing 100s to 1,000s of invoices/month
• CFOs, Finance Managers, Accounts Payable Officers responsible for managing spend, compliance and cash flow risk
• Organisations in sectors such as services, construction, retail, membership-based, or NFPs where supplier diversity and frequent claims increase exposure

Why Fraud Risk Is Real in ANZ

• External scams, such as false billing or payment redirection, remain common: many firms report being targeted
• Internal abuse is also widespread: inflated claims, duplicate reimbursements, or fictitious expenses can remain undetected where controls are weak.
• Manual or siloed systems (spreadsheets, paper, fragmented tools) create blind spots: duplicates, altered receipts or suspicious patterns can slip through unchecked.
• Even a single undetected fraudulent invoice or expense can erode trust with suppliers, disrupt cash flow, and damage organisational reputation long after the money is gone. 

How to Build Fraud-Resistant Expense & Invoice Processes

Here’s a layered, practical approach combining people, process and technology, that any Australian business can implement.

1. Set Clear Policies & Separate Duties

• Define what expenses/invoices are acceptable (e.g. lodging, meals, travel, supplier invoices) and what’s out-of-policy.
• Assign different people for submission, approval, and payment. Avoid having one person handle the full process.
• Introduce multi-level approvals based on dollar thresholds — higher-risks require additional sign-off.
• Maintain digital audit trails: every transaction should be traceable from submission to payment.

2. Supplier Verification & Secure Onboarding

• For new suppliers, verify their legitimacy before approving payment. This includes:
  • Confirming ABN (from official databases)
  • Checking their contact details against official sources (not just the email on the invoice)
  • Calling using verified phone numbers, never rely solely on email correspondence. 
• Maintain a “verified supplier list” and restrict payment to only those on the list.

3. Employee Training, Awareness & Whistleblowing

• Train staff on common fraud red flags, supplier verification, invoice-approval policies and correct expense reporting procedures.
• Encourage a “speak up” culture by provide anonymous reporting tools or hotlines for staff to raise suspicious behaviour or invoices.

4. Regular Audits & Data-Driven Reviews

• Perform regular (monthly or quarterly) audits of expense claims and supplier invoices. Look for duplicates, abnormal patterns or spike in amounts.
• Use external audits or periodic independent reviews to keep internal controls credible and effective.

5. Use Automation & Smart Tools (Spend Management Software)

Manual controls alone aren’t enough — modern finance teams benefit from automation to catch inconsistencies, duplicates and out-of-policy transactions at scale.

Key automated safeguards:

• Real-time alerts for mismatched supplier details or banking info
• Duplicate-invoice detection (even if numbers or dates slightly changed)
• OCR-driven receipt matching to spot fake or altered receipts
• Automatic blocking of out-of-policy expenses
• Digital audit trail for full traceability of every claim or invoice payment

Key Principles & Rules

• Never allow a single person to both approve and pay invoices/expenses
• Always verify new suppliers (ABN, contact details, official records) before paying
• Maintain clear, written expense and invoice policies — and enforce them strictly
• Use digital audit trails and periodic audits to catch anomalies early
• Where possible, replace manual approvals with automation and AI-driven checks

Benefits of a Fraud-Resistant Spend Process

• Reduced financial losses: Early detection and prevention of fraudulent invoices or expense claims safeguard cash flow.
• Improved cash flow predictability & control — fewer “shock” losses and better budgeting.
• Stronger supplier and stakeholder trust — reliable payment practices build credibility.
• Less burden on finance teams — automation replaces time-consuming manual checks so teams focus on value-add work.
• Compliance & accountability — clear documentation, audit trails and approvals help during audits, GST/ATO reviews or internal investigations.

Suggested Integrations & Tools

For maximum effectiveness, tie fraud prevention into tools many ANZ businesses already use:

• Xero / MYOB — for accounting and supplier/invoice master data
• ERP platforms like Microsoft Dynamics 365 Business Central, NetSuite, Acumatica  to manage multi-entity, multi-location suppliers and entities
• A spend management platform (like ProSpend) to automate approvals, invoice matching, receipt matching, and vendor validation

FAQs

Q: How common is expense or invoice fraud in Australia?
A: Very — many mid-market ANZ companies report attempted or successful invoice fraud. One in five  businesses say they’ve been targeted with fraudulent invoices.

Q: Can mid-market businesses afford to implement these controls?
A: Yes. Many controls, like separation of duties or invoice verification are low-cost. Automation may cost more upfront, but it rapidly pays back by preventing losses, saving time, and improving cash-flow visibility.

Q: What if a fraudulent invoice gets approved anyway?
A: Regular audits, data matching and a whistle-blowing policy help catch issues early. If fraud is detected, stop payments immediately and launch a review. Also ensure supplier banking details are only changed following strict verification (not just email requests).

Q: Do we need to verify every supplier every time?
A: Not necessarily. For existing, verified suppliers, verification is only needed if critical details (e.g. bank account) change. But all new suppliers should undergo full checks — ABN validation, contact verification, and supplier due diligence.

Q: Can automation catch every form of fraud?
A: Automation significantly reduces risk, but it’s part of a broader control framework. Human oversight, audits, and a culture of accountability remain essential.

Q: How often should audits be performed?
A: At least quarterly is recommended, but monthly reviews are ideal for high-volume AP operations or organisations with high spend variability.

Q: What’s the risk of not having digital audit trails?
A: Manual or paper-based trails make it difficult to trace back who approved or paid what — complicating investigations, GST compliance or any external audit. It also makes fraudulent transactions harder to spot once they're lodged.

Q: Does this approach comply with ATO requirements and GST record-keeping obligations?
A: Yes. Digital records, validated invoices, and properly authorised expense claims all support proper GST documentation and make it easier to demonstrate compliance if ATO reviews records.

Related Reading:

• AP Management Software Australia | 2026 Guide
• Expense Management Software Australia | 2026 Guide
• FBT on Meal Entertainment: Actual Method vs 50/50 Method | Australia

Conclusion

Expense and invoice fraud is an ongoing threat for Australian organisations of all sizes, but with the right controls, policies and technology, you can reduce exposure significantly. Strengthen your processes, verify every supplier, maintain clear audit trails and automate critical checks wherever possible. These steps protect your cash flow, safeguard your team, and build long-term trust across your organisation and supplier network.

Fraud prevention isn’t a once-off project, it is a continual practice of tightening controls, reviewing data, and empowering your finance team with the tools they need to stay ahead.