# Fighting back against invoice fraud Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2019-04-29 Category: BUSINESS Category URL: https://financedigest.com/category/business Meta Title: Invoice Fraud in SMEs: Costly Threats and Preventive Meta Description: Learn how invoice fraud can impact SMEs and large organisations, and discover preventive measures to safeguard your business against financial losses. URL: https://financedigest.com/fighting-back-against-invoice-fraudhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/fd060917-1-1736839057442-compressed.jpg) _By **Neil Robertson**, CEO of_ [_Compleat Software_](https://www.compleatsoftware.com/) The effect of invoice fraud on SMEs is rarely discussed – but collectively, it costs these organisations £9bn every year. And it’s not just SMEs that are affected – Patisserie Valerie recently discovered a £40m ‘black hole’ in its accounts, due in part to invoice fraud. So if you’re running a business, what can you do to fight back against it? **How invoice fraud happens** Invoice fraud isn’t sophisticated criminal masterminds hacking into your [systems and stealing all your data](https://www.financedigest.com/interoperability-of-data-to-accelerate-the-whole-slide-imaging-systems-market.html "Interoperability of data to accelerate the Whole Slide Imaging Systems Market") – it’s more about manipulating people through holes in the accounts payable process. One typical case might be a fraudulent individual sending an invoice marked late to your [finance team](https://www.financedigest.com/finance-teams-using-ai-outperform-peers-as-demand-for-skills-grows.html "Finance Teams Using AI Outperform Peers as Demand for Skills Grows") with an amount that’s just low enough that nobody senior has to sign off on it. Other methods used by fraudsters involve replicating a legitimate invoice or [inflating its price](https://www.financedigest.com/companies-cost-inflation-is-slowing-but-shoppers-may-wait-for-lower-prices.html "Companies’ cost inflation is slowing but shoppers may wait for lower prices"). The common threat is inattention:invoice fraud [operates on the assumption that nobody will look closely at the document or flag any problems](https://www.financedigest.com/australias-qantas-apologises-to-customers-for-operational-problems.html "Australia’s Qantas apologises to customers for operational problems"). It’s therefore no surprise that [businesses where the left hand and the right hand aren’t necessarily on speaking terms](https://www.financedigest.com/hyperspectral-imaging-system-market-know-latest-trends-forecast-for-long-term-business-planning-up-to-2026.html "Hyperspectral Imaging System Market – Know Latest Trends & Forecast for Long-term Business Planning up to 2026") tend to be the most common victims.Poor internal communication can be very expensive. And it’s not just SMEs who fall prey to such [scams –Dell recently fell victim](https://www.financedigest.com/how-can-banks-defend-the-latest-generation-of-scam-victims.html "How can banks defend the latest generation of scam victims?") to £1m worth of invoice fraud over the course of five years. In another case, a single fraudulent invoice had been running for over a decade; while it was only a small amount in and of itself, the cumulative [cost to the business](https://www.financedigest.com/esg-prepared-why-ignoring-esg-is-a-costly-business.html "ESG Prepared: Why Ignoring ESG is a Costly Business") was almost £10,000. If it sounds like the kind of crime almost anyone could commit, that’s because it is. It exploits the simple fact that [running a business](https://www.financedigest.com/how-to-use-a-pos-system-to-run-your-business.html "How To Use A POS System To Run Your Business?") involves spinning a lot of plates and keeping a lot of people happy – and that there often isn’t time to give innocuous-seeming invoices the attention they require. [Businesses must](https://www.financedigest.com/to-get-employees-back-in-the-office-business-leaders-must-do-their-homework.html "To get employees back in the office, business leaders must do their homework") remain alert to the problem of invoice fraud and actively look to plug the holes in their processes. If you’re running a business, that [means working](https://www.financedigest.com/working-from-home-what-does-it-mean-for-your-taxes.html "Working from home: what does it mean for your taxes?") together with your accounts payable department to manage invoices and creating a plan to spot fake invoices before they become financial losses. **Preventive measures** Paying forensic attention to your invoices will help, but [businesses have finite people and finite time](https://www.financedigest.com/the-role-of-invisible-real-time-payments-in-fueling-the-future-of-cx-in-business.html "The role of invisible, real-time payments in fueling the future of CX in business"). When one [person in the finance](https://www.financedigest.com/six-ways-to-prepare-for-a-personal-finance-crisis.html "Six ways to prepare for a personal finance crisis") team is wearing multiple hats, you can’t reasonably expect them to devote the necessary time and resources to accounts payable. If the responsibility for handling and inspecting invoices falls on one person, unnecessary errors will occur. Since invoice fraud exploits ignorance, education should be your company’s priority. Letting your team [know about the problem](https://www.financedigest.com/solve-a-problem-you-know-and-live.html "Solve a Problem You Know and Live"), and how they can help counteract it, can go a long way: brief them on the dangers of invoice fraud and provide some best practice tips. Technology can also help. If you haven’t got the internal resources to check every invoice, the right [software solutions](https://www.financedigest.com/healthcare-software-solutions-to-ride-the-immunohematology-market.html "Healthcare Software Solutions to ride the Immunohematology Market") can speed up and simplify the process of safeguarding against fraudulence. While technology rarely slots in instantaneously, the time spent adjusting to it and learning how to use it will pay off in the long-term. Procure-to-pay systems can help alleviate the frustration of day-to-day accounting: streamlining expenses, purchase orders, and of course, invoice management. You can usually pick and choose the features that are most relevant to you, but if you’re looking to [fight invoice fraud](https://www.financedigest.com/how-speech-recognition-and-ai-are-fighting-fraud-in-financial-services.html "How speech recognition and AI are fighting fraud in financial services ") specifically, select something with integrated verification.This essentially means that new suppliers must be [vetted and authorised before invoices are approved](https://www.financedigest.com/portugal-approves-new-vetting-system-after-string-of-hiring-scandals.html "Portugal approves new vetting system after string of hiring scandals") – and that any attempts to change information are flagged in advance of payment. **Long-term protection** The responsibility of [preventing invoice fraud often falls to the accounting](https://www.financedigest.com/scams-avoided-how-to-prevent-bank-account-scams-in-2023.html "Scams Avoided: How to Prevent Bank Account Scams in 2023") team – accounts payable in particular. But invoice [fraud is something that affects the whole business](https://www.financedigest.com/why-your-business-is-vulnerable-to-supplier-fraud.html "Why Your Business is Vulnerable to Supplier Fraud"), and the whole business should be aware of it and work to prevent it. One route to stopping invoice fraud in its tracks is simple, open dialogue: you can’t [deal with a problem if you don’t talk](https://www.financedigest.com/sabadell-in-talks-with-worldline-nexi-and-fiserv-for-payments-deal-sources.html "Sabadell in talks with Worldline, Nexi and Fiserv for payments deal -sources") about it. The other is finding and implementing the right technical solutions. Embracing procure-to-pay technology will give you the time, the space, and the peace of mind you need to stop [worrying about invoices and start focusing](https://www.financedigest.com/european-shares-rise-on-easing-energy-supply-worries-draghi-speech-in-focus.html "European shares rise on easing energy supply worries; Draghi speech in focus") on what really matters. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---