How to Prevent Supply Fraud

There are many opportunities for people to act or present themselves as a supplier to commit fraud. If you know what to look it will be easier to spot the red flags and prevent your company from paying false, inflated, or duplicate invoices.

Differences in the purchase order and invoice

Unusual amounts due

Emails from non-company addresses

Requests for payments to be sent to different addresses or locations you know to be residential areas

Unable to locate invoiced goods in inventory

Differences between invoice amounts and receiving records that would indicate inflated costs

Invoices to the same vendor with similar amounts due

Invoices with different amounts but identical purchase order number referenced

One strategy fraudsters use is to send invoices to companies for routine goods like copier paper, office supplies, ink, pens, pencils and commonly used items. The hope is that the accounts payable employee sees what appears to be a genuine looking invoice and tosses into the pile of other invoices all to be paid at the next check run. The bad thing is that fraud is getting more complex and harder to spot, but there are some precautions you can put in place to help fight fraud.

Educate your staff – Make sure accounts payable employees are well trained, shown what scams and fraud techniques are being used today, and have resources to access to stay aware of anything in your area that may be going around the local businesses. Check with your local Chamber of Commerce or Better Business Bureau to see if any notification process is in place with scams come to light.

Set Up and Follow Procedures – Before any invoice is paid, have rules in place to verify and authenticate. Check the internally generated purchase order against the invoice and make sure they match each other. But not only that, check to make sure the goods received also match the quantities ordered and billed for. Wither procedures in place and followed, you can significantly reduce the chances of any fraudulent invoice being carelessly paid.

Verify New Suppliers – Before adding a new supplier to the approved list, do your due diligence. Check to be sure the company website matches what is being said. Contact the BBB closest to the potential supplier to inquire about complaints. Depending on the distance involved, you may also be able to go for a visual inspection or schedule a tour. The amount of business you expect to do will determine how far and what steps you need to take to verify the authenticity of the business.