# Why Your Business is Vulnerable to Supplier Fraud Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-10-31 Category: BUSINESS Category URL: https://financedigest.com/category/business Meta Title: Preventing supplier fraud with effective B2B apps and software solutions Meta Description: Learn how implementing the right software solutions can help prevent invoice fraud and protect your company's bottom line from deceitful third-party URL: https://financedigest.com/why-your-business-is-vulnerable-to-supplier-fraudhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/trust-1736814950865-compressed.jpg) ![](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/eric-weitz-1736814950834-compressed.jpg) _Your onboarding and invoicing processes could be your biggest liabilities_ _By_ **_Eric Weitz,_** _Vice President, [Business Development](https://www.financedigest.com/brand-metrics-continues-on-steep-growth-trajectory-with-appointment-of-vp-business-development-in-the-us.html "Brand Metrics continues on steep growth trajectory with appointment of VP Business Development in the US") of Relish_ No [business can operate](https://www.financedigest.com/how-business-owners-can-improve-their-operational-and-financial-performance-through-contactless-and-card-payments.html "How Business Owners can Improve their Operational and Financial Performance through Contactless and Card Payments") as an island. It takes a trusting relationship across [team members](https://www.financedigest.com/playground-xyz-appoints-new-team-members-as-it-solidifies-its-position-as-a-leader-in-the-attention-space.html "Playground xyz appoints new team members as it solidifies its position as a leader in the attention space"), suppliers and behind-the-scenes operations to make any endeavor successful. Trusting third-party vendor relationships is especially crucial since, without them, companies wouldn’t be able to [meet customer](https://www.financedigest.com/meeting-customers-where-they-are-through-financial-inclusion-and-hyper-personalization.html "Meeting Customers “Where They Are” Through Financial Inclusion and Hyper-Personalization") demands, maintain their inventory, or ship products. This trust can be tenuous, however, when third-party suppliers choose to act without integrity. Through supplier fraud that manifests as fake accounts that exist in name only, invoice and [bank account](https://www.financedigest.com/new-legislation-makes-switching-bank-accounts-simples.html "New legislation makes switching bank accounts “simples”") scams, fraudulent orders, and a host of other deceitful maneuvers, bad actors can inflict irreparable damage to a brand’s reputation and bottom line. It doesn’t have to be this way. [Avoiding supplier scams](https://www.financedigest.com/how-to-avoid-online-dating-scams.html "How To Avoid Online Dating Scams?") can be as simple as implementing the right software solutions. Still, most [businesses rely solely on trust and manual processes](https://www.financedigest.com/5-reasons-why-modernising-is-the-most-important-ongoing-process-for-any-business.html "5 Reasons Why Modernising Is The Most Important Ongoing Process For Any Business") when vetting and working with outside vendors and suppliers. In fact, only [33 percent of companies](https://blog.whistic.com/part-1-get-access-to-or-build-a-third-party-vendor-list-cbd4e5244811) have an actual inventory of what their third-party vendors are doing. So, it is no surprise that a significant number of [businesses (a whopping 84 percent)](https://view.ceros.com/duffandphelps/gfrr-landing-page-2/p/1) fall victim to at least one instance of fraud each year. **The Devastating Impact of Invoice Fraud** It would be easy to assume that [industry goliaths are the only ones at risk](https://www.financedigest.com/hybrid-working-a-risk-or-opportunity-for-the-financial-services-industry-2.html "Hybrid working: a risk or opportunity for the financial services industry?") for this type of activity. Still, [small- and medium-sized businesses](https://www.financedigest.com/interest-rates-are-cut-to-an-all-time-low-what-will-this-mean-for-small-businesses.html "Interest rates are cut to an all-time low. What will this mean for small businesses?") are more likely to be targeted. And while a few fraudulent invoices may not sound like much, thousands, if not millions, of [dollars can be at stake when companies let even a few of these slip](https://www.financedigest.com/dollar-slips-yuan-gains-on-china-pmi-hot-inflation-lifts-euro.html "Dollar slips, yuan gains on China PMI; hot inflation lifts euro") through the cracks. For smaller companies and startups, these scams can be devastating. [Account Payable teams](https://www.financedigest.com/what-can-accountants-learn-from-great-britains-olympic-team.html "What can accountants learn from Great Britain’s Olympic team?") are a company’s first line of defense, but many of these team members aren’t sure what to look for. In fact, [31 percent of small businesses don’t know what payment fraud is, and 54 percent](https://smallbusiness.co.uk/small-business-fraud-realistically-2542632/) don’t have a policy for double-checking invoice details. While they aren’t as frequently the victim, even heavily staffed powerhouse brands are not immune to this [type of fraud](https://www.financedigest.com/types-of-fraud-in-e-commerce.html "TYPES OF FRAUD IN E-COMMERCE"). In 2020, Amazon was duped by a [$19 million invoice scam](https://www.pymnts.com/news/b2b-payments/2020/invoice-fraud-strikes-amazon-in-19m-scam/) led by two brothers who were billing the company for goods that were never actually purchased. Google and Facebook were also tricked by invoice fraud, [costing the companies $23 million](https://www.financedigest.com/australias-westpac-flags-950-million-profit-hit-led-by-energy-exit-costs.html "Australia’s Westpac flags 0 million profit hit, led by energy exit costs") and $100 million, respectively. Google and Facebook eventually recovered that money, but it was a rare win. Diesel Jeans cited invoice fraud in its 2019 bankruptcy filing, and toy manufacturer Mattel lost $3 million [due to email scams that impersonated its CEO](https://www.financedigest.com/uniper-ceo-to-resign-due-to-government-takeover.html "Uniper CEO to resign due to government takeover"). **Stopping Scams Before They Start** [Preventing supplier fraud](https://www.financedigest.com/payroll-fraud-and-how-to-prevent-it.html "Payroll fraud and how to prevent it") comes down to one crucial action: implementing the right B2B apps and enterprise software. With the proper procurement and invoicing systems, organizations can be more [resilient in their everyday operations](https://www.financedigest.com/2021-predictions-operational-resilience-takes-center-stage.html "2021 Predictions: Operational Resilience Takes Center Stage") and mitigate fraud across their spend management process—all while saving employee time and resources. Investing in a B2B app suite that strategically extends enterprise technology solutions to bridge common gaps, like supplier onboarding and invoicing, automates the time-consuming, fallible tasks of validating third-party vendor [data and digitizing](https://www.financedigest.com/why-data-is-the-best-weapon-in-the-war-for-digital-talent.html "Why data is the best weapon in the war for digital talent") invoices. This solution was illustrated in a recent case study by an embedded B2B app solutions provider. The study analyzed the experience of a global healthcare medical supply company that [manages thousands of suppliers and needed a way](https://www.financedigest.com/5-practical-ways-to-manage-your-business-expenses.html "5 Practical Ways To Manage Your Business Expenses") to accelerate its supplier onboarding process while sticking to strict international patient privacy standards. Through the adoption of a B2B app, the time-consuming manual supplier registration [process was transitioned into an automated validation system](https://www.financedigest.com/solvency-ii-pushing-existing-systems-and-processes-harder-is-not-enough-for-compliance.html "Solvency II: pushing existing systems and processes harder is not enough for compliance"), ultimately sifting out fraudulent suppliers before they could strike and saving an average of 30 minutes of employee time per instance. **Minimizing Risk and Streamlining Supplier Validation** Cloud software is an essential component of a security-minded infrastructure, but it is not a one-size-fits-all mechanism. Each company is unique, requiring embedded B2B app [solutions that strategically extend enterprise applications to meet](https://www.financedigest.com/meet-tilak-joshi-the-fintech-ceo-building-modern-solutions-for-the-gig-economy.html "Meet Tilak Joshi: the fintech CEO building modern solutions for the gig economy") the requirements of the organization and industry category. Enterprise applications strive to safeguard against third-party attacks and scams; however, validating supplier [data and invoicing remains](https://www.financedigest.com/european-bourses-steady-as-focus-remains-on-key-economic-data.html "European bourses steady as focus remains on key economic data") a manual effort. Even the most highly skilled worker cannot eliminate human error, leaving an [opportunity for fraudulent suppliers to exploit](https://www.financedigest.com/an-analysis-of-vc-investment-in-the-defence-sector-and-the-mods-readiness-to-exploit-digital-opportunities.html "An analysis of VC investment in the Defence sector and the MOD’s readiness to exploit digital opportunities"). Partnering with the right B2B applications, on the other hand, can save hours of manual input effort each month, giving companies a [competitive edge](https://www.financedigest.com/leveraging-ai-for-the-competitive-edge-in-insurance.html "Leveraging AI for the Competitive Edge in Insurance  ") in the market—an important improvement for a rapidly evolving digital era. AI and machine learning that continues to observe and update without human intervention, resolving errors and adjusting for many unforeseen variables, [mean that companies can experience a meaningful improvement to their model without significant change management](https://www.financedigest.com/senior-managers-regime-what-does-it-mean-for-the-industry.html "SENIOR MANAGERS REGIME – WHAT DOES IT MEAN FOR THE INDUSTRY?") or extensive integration build. [Every instance of supplier fraud that slips through the cracks means a loss—of finances](https://www.financedigest.com/top-5-security-technologies-that-every-finance-institution-workplace-should-consider.html "Top 5 Security Technologies That Every Finance Institution Workplace Should Consider"), brand reputation, and trust. A tailored, strategic combination of enterprise software [solutions with the right B2B applications is the key](https://www.financedigest.com/exploring-the-key-features-of-bnpl-solutions.html "Exploring the key features of BNPL solutions") to rooting out those risks before they have a chance to strike. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---