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The division of accounts payable is a frequent target for fraud. Criminals aiming to abuse your company use AP departments mired in paperwork to submit counterfeit invoices in the expectation that they would pass muster as legitimate. It’s feasible that a single faulty invoice won’t have a significant effect on your business. But over time, invoice fraud has the potential to grow to be a very expensive issue. Although stopping invoice fraud can be irritating, using these suggestions can greatly lower the likelihood of your business becoming a victim.
When an invoice is fraudulently submitted, a con artist informs your business that the supplier’s payment information has changed and provides new information to con you. The con artist can pose as an employee of your own company or even claim to be from a legitimate supplier to your business. Because money is frequently transferred quickly, it can be very challenging to reclaim money from fraudulent accounts.
Fraudulent invoices are frequently aware of the connections between businesses and their suppliers and will be aware of the specifics of when recurring payments are due. Only when the genuine provider investigates non-payments will the fraud possibly be found. The well-written nature of fraudulent letters and emails frequently makes it challenging to detect fraud in the absence of effective operating procedures and controls. Additionally, it is simple to spoof email addresses, or in the event of malware-infected computers, thieves can access real email addresses. You should always use extreme caution when updating someone else’s bank information if you are paying them.
You’re considerably less likely to pay a false invoice if you can connect every invoice to a purchase order and a receipt for the products. Three independent documents are usually not fabricated by scammers.
Both internal and external parties are capable of perpetrating invoice fraud. Employees who are content with their jobs are less likely to perpetrate fraud and more likely to detect it when it occurs elsewhere. They are more inclined to care about acting ethically toward the corporation if they have no cause for complaint.
Often, fraudulent invoices are generated using fictitious company names, a real name, but a fictitious address or bank account number. To verify the legitimacy of any new suppliers, you should research them online and use Google Maps to locate their addresses. A major warning sign is whether the address is either residential or a post office box. If the account information for any of your current vendors changes, make sure to check in with them directly.
Amounts on an invoice may give away red flags that something isn’t right. Checks that barely pass the $1,000 mark should arouse suspicion if your business requires additional approval for invoices over that amount.
When something changes, you’ll be able to see it if you’re monitoring invoice activity. For instance, one vendor might normally send 5 to 10 bills every month, but in one quarter you receive 50 from them. Even though that might be true, you should nonetheless contact them and confirm.
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