Detect & prevent invoice fraud before it happens

Red flags for invoice fraud include unexpected or duplicate invoices, missing information like tax IDs or contact details, pressure for immediate payment, unusual payment methods, discrepancies in amounts or invoice numbers, changes in supplier banking information, and invoices for services never received. Be especially wary of invoices that arrive outside normal billing cycles or contain unusual formatting and spelling errors.

Verify an invoice by confirming it matches your purchase order, checking the supplier details against your records, calling the vendor using contact information from your files (not the invoice), confirming delivery of goods/services, reviewing for calculation errors, and verifying tax information. Implement a multi-person approval process and maintain a database of approved vendors to compare against.

Invoice manipulation fraud occurs when someone alters legitimate invoices or creates fake ones to redirect payments. This includes changing bank account details, inflating amounts, duplicating invoices, or creating completely fictitious bills. Perpetrators may pose as legitimate vendors, create shell companies, or be internal employees with access to accounting systems. This fraud typically aims to divert funds to unauthorized accounts.

To prove invoice fraud, collect evidence including the fraudulent invoices, bank records showing payments, communication with the fake vendor, and documentation showing the actual goods/services were never delivered. Compare the suspicious invoice with legitimate ones from the same vendor to identify discrepancies. Document the verification attempts you made and report the fraud to law enforcement, providing all evidence. Consider consulting a forensic accountant to strengthen your case.