Companies face the challenge of taking action against invoice fraud

Today, businesses large and small are struggling with an increase in billing fraud. Billing fraud alone accounted for $12 billion of global exposure in the first three months of 2020. Between April and May, BEC (Business Email Compromise) attacks increased by 200% weekly.

This dramatic increase in fraud is costly and time-consuming to correct, and many businesses are struggling to find a solution. Fortunately, there are steps all businesses can take to protect themselves from this growing problem.

Dark web monitoring is becoming more sophisticated due to the increase in fraud. By monitoring the Dark Web, organizations can identify fraudulent activity early and take action to prevent it.

How does bill fraud work?

There are several ways criminals can commit bill fraud. A standard method is called “baiting”. In this type of scam, the criminal sends a business a fake bill for goods or services that the business does not need.

The invoice looks legitimate, but the goods or services are never delivered to the company. This type of scam can be difficult to spot because the bill looks like a legitimate bill for goods or services that the company may have ordered in the past.

Another standard method of billing fraud is known as “phishing”. In this type of scam, scammers trick consumers or businesses by sending them an email that appears to be from a legitimate company. The email contains a link to a fake website that asks the victim to enter personal or financial information.

What can companies do to avoid invoice fraud?

There are several steps companies can take to protect themselves from billing fraud.

  1. Supplier Recognition

The first step is to ensure that all suppliers are legitimate. This can be done by checking the supplier’s contact information and verifying that they are registered with the Better Business Bureau.

In addition, companies should only work with suppliers who have a good reputation. You can read online reviews or ask other companies in your industry for recommendations. In addition, companies can request references from the supplier and contact these references to verify the quality of the supplier’s work.

  1. Use a disciplined billing and cybersecurity system

This means that companies should create and maintain a database of all their suppliers.

The supplier’s contact information, the type of goods or services supplied, and the price paid should be included in the database. With this information, supplier invoices can be checked for accuracy. In addition to a disciplined billing system, companies should also have a cybersecurity system in place. This system should include firewalls, antivirus software, intrusion detection systems, and dark web scanning tools.

These systems can help protect businesses from phishing attacks and other types of cybercrime. This information can be used to reconcile accounts and detect fraudulent activity.

  1. Streamline your AP and AR processes

Every organization’s AP and AR processes should be streamlined. This ensures that all invoices are legal and payments are made on time. Each company’s AP and AR processes display all invoices in chronological order. This will help businesses track all invoices and payments.

Businesses can also leverage invoice financing to streamline their AP and AR processes. Invoice financing is when companies sell their unpaid invoices to third parties at a discount. This allows businesses to pay their bills in advance and free up working capital.

4. No order, no payment

Another way to protect businesses from billing fraud is with a no order, no payment policy. This means businesses should only pay for goods or services purchased through an order.

A purchase order is an agreement between a company and a supplier to purchase goods or services. The order should state the price, quantity and quality of the goods or services purchased. This policy can prevent businesses from paying for goods or services that were never delivered.

  1. Use three-way matching

Three-way matching means businesses match the order, the invoice, and the goods or services received before making a payment. This can help ensure that all three documents are legitimate and that the goods or services have been delivered.

Three-way matching includes:

  1. Reconciling the order with the invoice to ensure that the goods or services invoiced correspond to those ordered.
  2. Matching the invoice to the goods or services received ensures that what was invoiced was delivered.
  3. Match payment to invoice to ensure businesses only pay for legitimate invoices

As we head into 2022, businesses need to be proactive about billing fraud. That means being aware of the different methods scammers use to try to steal your business, having logs in place to prevent these scams, and knowing what to do if you fall victim to a scam.

At the very least, check all bills thoroughly before paying them and keep an eye on your accounting records so any discrepancies can be spotted quickly. With vigilance and some basic security measures, your business can protect itself from one of the fastest growing types of fraud online. Companies face the challenge of taking action against invoice fraud

Fry Electronics Team

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