Faisal Abidi Provides A Guide To Identify And Prevent Invoice Scam

The act of sending bogus invoices purporting to be from a legitimate supplier and informing your business that their payment information has changed while supplying false information is known as an invoice scam.

Scammers who commit invoice scams may be aware of current supplier relationships and frequently understand the specifics of when recurring payments are due. Often, invoice scam is only detected when a reputable supplier pursues unpaid invoices.

False invoices are frequently expertly constructed and can be challenging to identify. Scammers send bills from an email account that looks like your actual supplier.

Faisal Abidi from RNF Technologies thoroughly talked about how it is frequently challenging to recoup cash once you've sent a payment. Therefore, your business and finance team must be particularly vigilant when paying suppliers, significantly when payment information is altered.

Three Ways to Prevent Scam Vendor Invoices

1. Spend Money On Automatic Bill Matching

The best way to process a vendor invoice is to validate all of the linkages in the supply chain by comparing the invoice to the PO and any supporting goods receipt notes (GRN). You have a far lower chance of paying a phony invoice if you match all three documents.

Invoices will move directly through the AP process without any manual involvement when the three-way matching process is automated as part of an all-encompassing AP solution, saving employees time, minimizing errors, and lowering the risk of scams. When matching is automated, there is no human participation; thus, it is less likely that something will be overlooked or someone will be able to change any data.

When the matching process is automated, the software will flag any invoice data that is missing, inconsistent, or resembles another invoice that has already been through the matching process. This will allow AP employees to look into the problem before the invoice is approved.

2. Research About The Vendor

Scamming vendor invoices can frequently be avoided beginning with the selection and onboarding of vendors. You need to perform a variety of due diligence checks while onboarding vendors.

These actions consist of the following:

Make sure you follow all necessary procedures to confirm the vendor's legitimacy, that they deliver a certificate of incorporation, that their TAX/VAT number matches the information provided, that they offer evidence of bank account information, and that they supply an email address.

Making sure the vendor is not on any sanctions lists that would bar them from doing business is another aspect of such due diligence measures that may be required in the US.

An automated procure-to-pay solution with a vendor portal will ask you to gather such vendor master data as well as PO and invoice transmission preferences at the outset before any payments can be made to new accounts.

You ensure you only do business with authentically compliant vendors by requiring such information at the onboarding time and having vendors keep their data beyond that. Following that, you can monitor their performance and financial situation for the duration of the contract to ensure you remain shielded from scams and illegal activities.

3. The Division Of Labor

Allowing the same individual to handle and record financial transactions, such as payments, makes it much simpler to engage in scams.

However, segregation of duties is the idea that no person should be granted the power to handle two or more responsibilities that conflict with one another. Those who submit POs cannot approve bills within a typical AP function. In the same way, persons who choose and hire vendors cannot be held accountable for paying invoices. Another team member must confirm or authorize all actions to avoid prejudice, which may lead to fraudulent behaviors.

These are just two illustrations of the division of labor that need to exist inside a finance department; it gets more complicated as an organization grows.

The segregation of roles can be considerably aided by an automated procure-to-pay solution, with approval workflows controlling who authorizes bills and configured permissions, ensuring that no one is allowed to do contradictory actions within the system.