What you can do to prevent invoice fraud
Are you unsure if an unexpected invoice from a supplier is genuine or fake? Follow Zyla Accountants' top tips to protect yourself against invoice fraud.
The threat of invoice scams is significant and growing among business owners. Malicious redirection scams, or invoice fraud, totalled £56.7 million in 2021, with an average loss of over £14,000, according to a UK Finance report from 2022.
Furthermore, the report highlights that the majority of losses occurred on non-personal or business accounts where payments are made more frequently and at higher values.
With rising inflation, increasing energy costs, and a crisis in the cost of doing business, it's more important than ever for small businesses to protect their finances.
Invoice fraud: what is it?
An invoice redirection scam occurs when a fraudster tricks you into changing your bank details. As suppliers or even as consumers posing as businesses, such as tradesmen, these criminals target businesses. A lot of the time, they will contact you asking for updated payment information and demanding payment as soon as possible.
Fraud like this leaves legitimate invoices unpaid and businesses in the red. A large invoice such as a monthly retainer or bulk order, sent from business-to-business (B2B), can have a devastating effect on the cash flow of your small business.
What can I do to protect myself?
Fortunately, it is possible to verify the legitimacy of changes to payment details and protect yourself against fake invoices.
It is easy to hack email accounts or create fake invoices that look very similar to the real ones. Make sure your supplier is aware of any requests to change payment details before making a payment. Send an email or phone call to your supplier using a trusted number. Your commitment to protecting their interests will reassure them.
Pay attention to any requests for urgent payments, especially if you weren't expecting an invoice from your supplier. If you always pay invoices at the end of the month, a payment request in the middle of the month would be unusual. Exercise caution even if they appear to have been sent by someone in the business.
Be sure your staff is aware of the warning signs of scams and remind them to raise concerns about unexpected payments or changes to supplier information.
It is a common phishing scam technique to send email attachments that look like invoices. It would be better if you double-checked whether an invoice has been sent by your supplier.
Ensure the invoice is genuine by comparing it with other invoices you know to be genuine. When an invoice appears irregularly formatted or has blurred logos, it's likely to be a fake.
Make sure you are aware of the information on your company's website or social media. Since more small businesses are adopting and pivoting to e-commerce, you should be cautious about public information that fraudsters could use against you.
Transfer a small amount first, then confirm with the supplier that the payment details are correct and payment was received if you're paying a new supplier.
How do I deal with payment fraud?
Get in touch with your bank right away.
It is important to report any fake invoices to Action Fraud so that other businesses are not targeted by the same fraudster in the future.