Invoice Fraud was recorded as the 3rd highest method contributing to $128M lost for Australian's. Learn how AP Automation prevents fraud.
Invoice Fraud: Understand, Detect & Prevent
Invoice Fraud is a payment request received by your organisation to pay a fraudulent invoice that may be disguised as legitimate.
Invoice Fraud, also known as False Billing, is a request received by your organisation to pay a fraudulent invoice that may be disguised as legitimate. Invoice Fraud occurs frequently as it remains as a top 3 scam method in Australia, resulting in an astonishing $128M lost for hardworking Australian businesses in 2020. You may be thinking, how does Invoice Fraud occur? Let’s run through the most common ways an organisation may experience invoice fraud and how you can quickly prevent fraud from occurring in your organisation.
How does Invoice Fraud occur?
Invoice Fraud may sound like a simple fraud method to avoid, however, the ACCC reported close to 1,000 reports of invoice fraud valued over $2.3m lost for Australian organisations in December 2021 alone. Individuals or organisations that are committing this fraudulent activity via the internet (better known as cybercriminals), use a variety of methods to obtain data to utilise for Invoice Fraud including:
Accessing email systems: Cybercriminals commonly attempt to hijack staff emails by maneuvering through unsecured systems or even sometimes, guessing simple passwords. By accessing email systems, crucial data is exposed including invoices and supplier data which is then used to create false invoices.
Targetting new employees: Received an email requesting a Gift Card from an imposter claiming to be your CEO? Through professional social networks including LinkedIn, cybercriminals keep a close eye on new starters they can target for fraudulent activity.
Issuing fake directories or advertising: Cybercriminals target multiple departments of an organisation including sales or marketing. This comes in a form of a free listing or advertising offer. These requests will usually imitate genuine directories booking forms collecting sensitive data including signatures and payment details.
How can you prevent Invoice Fraud?
If you or your organisation has been a victim of Invoice Fraud, you are not alone. For finance staff, signs of fraud can be easily dismissed due to repetitive and tedious finance tasks including processing thousands of invoices per month. Ways to limit the risk of Invoice Fraud and maximise your organisations’ protection include:
Limiting Authorisation: By limiting authorisation and approval of sensitive documents to a select group of vigilant staff members, the risk of fraud is significantly decreased. Look to partner this with a thorough approval process and workflow.
Implementing Audit Trails: An Audit trail is crucial in any finance team. This gives you the ability to visit previous records to verify details including invoices, suppliers and bank details.
Issuing Confirmations: Confirmation is simply communicating with finance staff when purchases are made. Most organisations use confirmations in the form of a Purchase Order (PO) to control spending, whereby purchases are only made once a PO has been received.
Software is the best protection against Invoice Fraud
COVID has allowed staff to embrace mobile work environments which have resulted in a dramatic increase in fraud. Results are still being calculated, however, the ACCC states that losses for 2021 are trending “more than five times higher” than 2020 as cybercriminals find new ways to hijack details of hardworking Australian businesses.
The methods listed above will only slightly limit the risk of Invoice Fraud and can be easily dismissed by staff. Leading software such as ProSpend gives you access to key prevention tools that have been proven to eliminate fraud.
Prevention tools include Bank Validation, Supplier Average, Invoice Automation, Automatic Purchase Orders, Live Audit Trails plus much more. It comes as no surprise that leading organisations use ProSpend to automatically mitigate fraud and risk whilst reducing costs and time spent on Accounts Payable by up to 90%.
Invoice Fraud is a concern that organisations will face regularly. Prioritising protection over Invoice Fraud is essential due to the tedious and manual processes found in finance teams. Having a checklist in place using the methods above is a great way to start your journey on Fraud Protection. Adopting software such as ProSpend will offer best-in-class protection by automating processes and offering unmatched fraud prevention tools, protecting you and your organisation from Invoice Fraud.
ProSpend is Australia’s leading Spend Management Platform that offers smart automation for finance teams. Through one cloud-based platform, you can easily manage expenses, supplier invoices, purchase orders and travel spend. All with budget visibility. ProSpend is 100% Australian owned & developed and is used every day by leading brands, including KFC, WWF, Best & Less, Guide Dogs, Peoplebank and many more. For those looking to better understand the benefits of automation, book your FREE savings consultation.