Reducing Invoice Fraud requires a strong shield

With invoice and payment fraud incidents skyrocketing, companies need to install robust monitoring and control of their supplier invoice and payment process. In large part due to the pandemic, Business Email Compromise (BEC) attacks targeting supplier invoice and payment processes increased by 155% during the last year. Consequently, these crimes have come at the expense of large and small companies. Such crimes are often due to sophisticated schemes and lax procure-to-pay controls. However, your company can fight back against these attacks through digital transformation, upgrading controls, and greater employee awareness.

An Overlooked Ally

Criminals target Accounts Payable (AP) for the same reason “Slick Willie” Sutton robbed banks – “Because that’s where the money is”. AP can be an overlooked function in your organizational fraud prevention program. But an area entrusted with the disbursement of a majority of your company’s funds needs your full attention to be a strong ally in your company’s fight against fraud. 

Reducing invoice and payment fraud requires collaborating with the CFO and the Finance team to ensure the proper tools and controls are in place for the AP function. Because BEC attacks are easily leverageable and can generate big payoffs, they are increasingly popular with criminals. 

Types of Invoice and Payment Fraud

Criminals, both internal and external, have various schemes at their disposal to initiate invoice and payment fraud. Below are some of the most common invoice and payment fraud types: 

Invoice Fraud Types:

  • Account Takeover – A fraudster sends emails with invoices from a legitimate email account or through social engineering, for instance masquerading as a vendor seeking payment. 
  • Spoofed Invoices – Fake invoices often cleverly disguised as one of your existing vendors, and frequently for generic services. 
  • Collusion – Encompasses either two employees working together or an employee working with someone externally to issue payment for fraudulent invoices.
  • Shell Company – An employee sets up a fictitious company in your system and issues invoices for non-existent services provided.

Payment Fraud Types:

  • Check Fraud – Still the leading payment fraud tactic, an Association for Financial Professionals survey found 75% of organizations experienced check fraud. 
  • ACH and Wire Fraud – Typically occurs through BEC. For example, an email from a fake supplier requests electronic payment for a phony invoice, clicking on a link, or gathering sensitive information. 
  • Expense Reimbursement – Fraudulent payment requests made by employees for travel and other expenses. 

6 Actions for Stopping Invoice Fraud Now

By implementing digital transformation initiatives, control updates, and ongoing training, you can better shield your company from invoice and payment fraud. Whether your organization is large or small, these six actions will help reduce invoice and payment fraud:

   1. Automate AP Processing

Transforming your AP process by automating manual tasks reduces the potential to manipulate systems and processes to defraud your company. In addition, it brings other benefits, including greater efficiency, increased accuracy, and greater predictability. 

   2. Monitor Emails to Payables

In addition to AP automation, installing email monitoring to detect fraudulent invoices and phishing attempts supplies another layer of protection for your enterprise. These fraud prevention solutions can stop BEC attacks in their tracks, avoiding costly losses.  Moreover, with continuous active risk assessment and deep learning models, the tool can help you stay ahead of the fraudsters.

   3. Strengthen Payment Controls

As your last line of defense against invoice fraud, tightening up your payment controls is a straightforward action all companies must employ to stop invoice fraud. An ACFE survey found that fraud is most often committed in large organizations due to the overriding of controls. Conversely, in small companies, it is more likely there are insufficient controls. 

   4. Separation of Duties

Ensure Payables roles and responsibilities are clearly defined, and duties are separated to help reduce vulnerability to collusion. With more changes to the work environment likely coming soon, Finance needs to be continually monitoring to ensure separation of duties within the procure-to-pay process. 

   5. Targeted Training

With the high turnover typical in AP, you need to ensure that a structured cadence of fraud training is available for new employees. Furthermore, longer-term associates benefit from the reinforcement and updates on ever-changing fraud tactics. 

   6. Formal Escalation

Develop formal escalation processes for AP staff and develop “Tip lines” for employees to report potential fraud. In fact, the previously mentioned ACFE survey found 43% of fraud was detected by employee Tip programs. 

Unfortunately, even the most experienced Payables staff can be fooled by invoice and payment fraud. They need additional support to stem the tide against fraud with automation and email monitoring tools. Combined with tighter controls and increased awareness, it will help your company reduce fraud and improve the bottom line.

Deploy Email AI

Implementing’s Email AI yields more control over the inbox and increased protection for your company from BEC, account takeover, and other attacks. To stay ahead of the bad guys, you need a fraud solution that includes it all. 

  • AI-powered deep learning models that classify and track multiple pieces of data across countless transactions to identify potential patterns of fraud.
  • The robustness to nearly instantaneously identify fake senders, fraudulent invoices, false bank accounts, and wire requests. 
  • Our global anti-fraud consortium that provides your business with a rich data set to better identify and flag malicious actors. This collective intelligence is available through our network of companies that furnish anonymized fraud-related data.
  • An intuitive design that clearly labels potential threats based on a risk scoring system.
  • The scalability to adapt as you grow, and the customization to meet your organization’s unique requirements. 

Right now, we are offering our Email AI for free. Click here to learn more about how an AI-based fraud solution like Email AI gives your organization a dynamic and nearly proactive defense against threats.