Spot & Prevent Invoice Fraud
One in seven, (14%) of small and medium-sized companies fell victim to invoice fraud during the past year, according to Barclays research.
These fake requests for payment or to update a client’s bank details are emailed by fraudsters, who disguise themselves as regular suppliers. They can also be costly, with 28% of reported scams resulting in losses of more than £5,000.
How does it happen?
- Invoice fraudsters are often aware of the relationships between companies and their suppliers, and will know the details of when regular payments are due. The fraud may only be discovered when the legitimate supplier follows up on non-payments.
- Fraudulent letters and emails sent to companies are often well-written, meaning the fraud is difficult to spot without strong operating processes and controls in place. Email addresses are also easy to spoof, or in the case of malware-infected PCs, criminals can access genuine email addresses.
- The process of changing the bank details of someone you are paying should always be treated with extreme caution.
Here at Corp & Comm we are obviously aware, trained and vigilant against these threats, as part of servicing our end to end credit control and debt recovery clients. However if you don’t currently outsource your credit control to experts, it’s worth considering how to prepare your teams against the risk:
How you can help to prevent invoice fraud – a checklist
- Always verify details of any new/amended payment instructions verbally by using details held on file, and not on the instruction. Fraudsters can spoof email addresses to make them appear to be from a genuine contact, including someone from your own organisation.
- If you are suspicious about a request made by phone, ask the caller if you can call them back on a trusted number.
- Fraudsters will attempt to pressure you into making mistakes – take the pressure off by taking control of the situation.
- Consider removing information such as testimonials from your own or your suppliers’ websites or social media channels that could lead fraudsters to knowing who your suppliers are.
- Look carefully at every invoice and compare it to previous invoices received that you know to be genuine – particularly the bank account details, wording used and the company logo.
- Consider setting up single points of contact with the companies you pay regularly
- Apply the same principles to requests from within your own organisation
- Electronic payments in the UK are made based on sort code and account number only, and any account name given is not routinely checked, therefore independent verification is important.
- Regularly conduct audits on your accounts
- Make all staff aware of this type of fraud, particularly those that are responsible for making payments.
- Outsource Credit Control – Employing experts to deal with your invoices, payment details and cashflow has several advantages. It frees up your time to focus on other priorities, it adds a specific skillset to your team, limits risk and improves cash in the bank. If you would like to discuss how we can help please just get in touch.
- Cyber Insurance – An added layer of protection can also come in the form of insurance. As with other areas of our business we have to consider the exposure and risk. So it is also worth considering your requirements for Cyber Insurance. We spoke to Jamie Illingworth, MD of Illingworth McNair to understand this area further:-
“It is vital that SME businesses look to protect themselves from the threat of cyber attack. These threats are becoming more prevalent and advanced in nature. The cost of cover used a barrier to SME’s but now products are available to protect businesses at affordable rates”
Find out more Illingworth McNair