By Zachary Amos, Features Editor at ReHack
In this age of the internet and technology, it’s never been easier to commit fraud, particularly with invoices. Invoice fraud has increased in frequency in recent years, becoming a nuisance to companies of every size and industry.
That’s why it’s more important than ever for businesses to protect themselves from fraud. Fortunately, there are plenty of ways to spot invoice fraud before getting hit with the bill. First, let’s go over what it is and how it works.
What Is Invoice Fraud?
Invoicing is a common business practice. It involves issuing a bill for goods and services and waiting for the customer to pay the provider.
While it’s meant to simplify the process of billing customers and getting paid, it can also lead to problems if it’s not handled properly. Invoicing requires trusting that the customer will pay the provider when requested. The company also needs the customer’s trust in turn.
Invoice fraud can take many forms. For instance, some criminals will impersonate a company by hijacking their email, then alert the recipient that the banking information has changed and they will wait to receive payment. Other times, criminals will use invoice scams to purchase goods or services on behalf of an organization. In some cases, they’ll use it to request payment for services already rendered.
How to Identify Invoice Fraud
Savvy criminals will try to make invoice fraud undetectable. However, there are various signs to watch for when receiving an invoice. Easily identify invoice fraud by being aware of these common traits:
- Fraudulent invoices often have spelling errors, poor grammar, or unprofessional writing in general. This is especially true if the company is based in another country.
- There is a sense of urgency to pay the invoice immediately rather than giving time to review it – especially when they refuse to share any more information until the customer makes the payment.
- Look for an invoice with details that don’t match the original contract.
What Does Invoice Fraud Look Like?
Invoice fraud can be tricky to catch, as the criminal does everything they can to deceive companies to get the money. Here are a few examples of what invoice fraud can look like:
- They announce a change in payment information, asking the customer to send payment to a different bank account.
- The recipient’s email is “bill@domain.com,” but the invoice is addressed to “bill@mail.com.” This is a red flag.
- Someone is trying to pass as a legitimate company and asks the customer to send money.
- When a vendor asks the customer to pay in Bitcoin or other cryptocurrencies instead of conventional currency.
Ways to Protect a Company From Invoice Fraud
When it comes to security, you should always be vigilant. No one should take any chances with their company’s money – it’s too valuable. Problems with invoices can slow down a company’s cash flow, to say nothing of the potential fraud involved. Here are the top ways companies can protect themselves from invoice fraud and make payments to the vendor safely.
1. Automate the Accounts Payable Process
Companies can protect themselves from invoice fraud whenever possible by automating accounts payable processes. Doing so prevents fraudulent invoices from making it through the system unnoticed and unpaid.
That’s how hackers gain access to funds. They’ll try to sneak them in before the company has authorized them.
Automating accounting and finance systems also creates a secure digital connection with suppliers. It prevents invoice fraud by keeping employees from creating phony invoices and uploading them into the system.
2. Implement Best Practices for Payment Processing
Hackers try to exploit humans in creative ways. The best way to prevent fraud is by establishing two points of contact with each vendor. If the vendor asks for a change in payment, it’s best to get verbal confirmation from two or more contacts.
Employees should only wire money once they validate the request if they receive it through email or text.
Companies should also maintain a payment schedule and set a threshold for payments, so they require a meeting before fulfillment.
3. Use Strong Passwords and Multi-Factor Authentication
In many cases, invoice fraud occurs when there is a security breach. Hackers can access network and login details from employees when they click on a link and unknowingly provide sensitive information.
Every employee must ensure they use strong passwords and change them regularly. The company should also enable two-factor (multi-factor) authentication to verify the user’s identity.
Companies should also consider implementing a password policy to ensure employees maintain the best password use practices.
Stop Hackers in Their Tracks
Invoice fraud is more common than most people think. That’s why it’s crucial to keep an eye out for suspicious activities that don’t line up with the usual requests for payment. Whenever something seems off, it’s best to avoid assuming anything and ensure all documents are legitimate before moving forward.
As the Features Editor at ReHack, Zac Amos writes about cybersecurity, artificial intelligence, and other tech topics. He is a frequent contributor to Brilliance Security Magazine.
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