There are many types of fraud that small businesses might face, including identity theft, payroll fraud and return fraud. But there is one type of fraud that often flies under the radar and collectively costs SMEs £9bn every year – invoice fraud.
Like many other types of fraud, invoice fraud relies heavily on social engineering. It occurs when fraudulent invoices are sent to a company and paid due to insufficient or vulnerable accounts payable processes. It’s an easy enough scam for criminals to execute if they’ve done their homework. Often, they send the accounts payable department an invoice marked as late for an amount that they know is low enough to bypass approval and not cause too much suspicion. In other instances, the fraudsters simply duplicate invoices, inflate them or raise the price beyond what was originally agreed.
If these invoices aren’t investigated (and they are specifically designed to avoid triggering a closer look) they often just get paid. Business with poor internal communications between departments are particularly susceptible – and this isn’t restricted to SMEs. Dell recently had more than $1 million stolen by an employee who filed fraudulent invoices over the course of five years. In another case, the FD of a mature mid-size company ran an analysis between the payroll bank account details and supplier bank account details. One invoice had been running for ten years, and despite it being a small amount, it cost the business nearly £10,000
It’s a particularly dangerous crime because it’s both easy to understand and execute. Companies have many relationships to keep on top of – suppliers, customers and employees – and so it can be difficult to keep track of all agreements made with each party. While accounts payable departments should be responsible for managing invoices, it’s up to the organisation as a

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