Invoice fraud: why it’s worse than ever and 4 steps to avoiding it

Blog AP Automation Best practice June 11, 2020

Invoice fraud has been on the rise during the COVID-19 pandemic as cybercriminals find more ways to create chaos in this time of crisis. Here we break down the situation and provide four tips on how your business can prevent – and eliminate – losing money from invoice scams.

Cybercrime and invoice fraud

The coronavirus pandemic has not only impacted people’s health or the world economy. It is also affecting how criminals go about their daily business – online. Cybercrime is, in 2020, something that we all know to take seriously. It wreaks havoc on businesses, society and entire infrastructures.

Cybercriminals are clever and constantly refining their strategies, so companies need to take proper actions to keep up with – and stay ahead of – security threats. However, it is not only hackers who are posing a problem. These days, we have seen a significant increase in digital fraud. More specifically, what I’ll dive into here is how invoice fraud is on the rise since the COVID-19 pandemic made its appearance.

Even markets with typically low fraud numbers are suffering

Sweden has a reputation of having little crime of all sorts. But even the safest places are not excluded from the threat of cybercrime.

Radio Sweden has stated that the number of fraudulent invoices (also called fake invoices) reported to the Swedish Trade Federation’s Warning List rose 100% during March and April 2020, compared to the same period last year. However, the numbers may be even higher because a fake invoice can be hard to detect without a heads-up.

Keeping track of invoices can be especially tricky when working from home, as so many are doing worldwide right now. Less communication between colleagues can lead to less control over purchases and deliveries when you are not physically at the office.

According to the Swedish Trade Federation, the majority of reported crimes these past months are fake invoices from companies pretending to sell antibacterial hand gel and disinfectants. Understandably, it can be easy to assume someone else in the company ordered the goods. Then you pay as usual without thinking twice. When you realise that the products haven’t arrived (or were never ordered to begin with) and try to get in touch with the sender, the company has taken your money and disappeared. These companies either send an invoice out of the blue or they “sell” their services via phone and by knocking on people’s doors. All you got was a bogus invoice. Fake invoices have come a long way, and they look authentic. So, what to do?

4 steps to avoiding invoice fraud

1. Carefully examine your list of suppliers. Does the company name coincide with one of your regular suppliers? If it does, everything should be legitimate. If not, contact a superior or call the listed contact person on the invoice to find out more. If your company uses summer interns to handle invoicing during the holidays, make sure they start by checking the supplier list. But remember: always know who you are doing business with.

2. Stay informed on warnings for illegitimate companies. Sweden has the Swedish Trade Federation’s Warning List with a list of companies that may not be legitimate. Find your local resource, stay updated on the list and do not pay these invoices.

3. Report invoice fraud immediately. If you happen upon a fake invoice, report it to the police and your local trade federation or association.

4. Invest in an e-invoicing solution to avoid invoice fraud altogether. Digital solutions are here to stay and come with benefits you may not have thought of. Digitalising your processes does NOT mean sending PDF invoices by email. These are not proper e-invoices and you should never communicate sensitive information via email. If you send and/or receive e-invoices through a certified service provider such as Pagero, all invoices are automatically secured. In the Pagero Network, both sender and receiver are required to do an “electronic handshake” before companies can start sending or receiving invoices to each other. That means that you pre-approve all senders and suppliers. You can relax knowing that all e-invoices and other messages you send or receive through our platform are completely safe. Good to know if you want to be on the safe side.

Digitalise and secure your invoicing process today!

Get in touch with us to find the right solution for your business and get started with e-invoicing. Gain full control today with 100% traceable, secure transactions.

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