According to the trade association UK Finance, 4 out of 10 companies in the United Kingdom are still unaware of the risks of invoice fraud. At the same time, a 75% increase in invoice and payment request fraud has been detected in the last 3 years, leaving businesses of all sizes with substantial financial losses.
It can happen to anyone. Between handling multiple documents at the same time, processing several invoices simultaneously, and having the pressure of a payment due date coming up, you can mistakenly approve a fraudulent invoice without notice.
Luckily there are solutions that can prevent you and your business from these malicious practices. In this blog, we will explain the difference between CEO and invoice fraud, provide real-life cases, and equip you with effective solutions for invoice fraud detection.
Invoice fraud vs CEO fraud: What’s the difference?
Invoice fraud and CEO fraud are two closely related types of fraud. Using a fake invoice to deceive a business into paying for goods or services that were never received constitutes invoice fraud.
From 2013 to 2015, for example, a man posed as an employee of a tech company and emailed fake invoices to Google and Facebook. Over two years, he acquired more than $120m before he was caught.
By posing as someone from a legitimate company, he could trick employees into paying the invoices for things they’d never ordered, sending the money directly to his bank account.
Similarly to invoice fraud, CEO fraud is when criminals pose as people in higher-up positions and trick employees into sending money for never rendered services.
For example, using a fake email address, a criminal posed as Shark Tank Barbara Corcoran’s secretary to trick her bookkeeper into paying $388,000 via wire transfer. The fake email address was just one letter different from the secretary’s, making it difficult to spot.
How can you protect your company?
According to the 2023 UK Finance report, invoice and CEO frauds remain significant threats to UK businesses.
In 2022, 6,729 businesses were duped through authorised push payment scams, resulting in approximately £77 million in losses. Notably, invoice fraud accounted for 44.8% (£34.5m) of those losses, while CEO fraud contributed 16.8% (£12.9m) of the £77 million total.
Financial crime expert Hinesh Shah underscores the need for businesses to strengthen online security, stressing the importance of businesses actively guarding against potential threats.
Here are some of the ways you can detect and prevent invoice or CEO fraud:
- Establish regular communication with your vendor
- Keep track of unusual vendors’ activity
- Double-check the payment information
- Use two-way matching to compare invoices with purchase orders
- Use invoice processing software with automated fraud detection
Do you want to safeguard your organisation from financial fraud? Join Klippa at stand B10 during the Accountex Summit Manchester to learn about our software. Prevent the risks of invoice fraud while saving time from repetitive manual tasks!
By Klippa
Klippa will be exhibiting at Accountex Summit Manchester on the 19th September 2023 on stand B10.