The ‘F’ word unnerves the best of us in the business world – ‘fraud’. According to the ACCC, in Australia, the average losses to invoice fraud are more than five times higher than the average losses in the same period last year. That’s enough to make any small business shake in their boots, especially considering that in 2020, over $14 million in losses to payment redirection scams were reported by Australian businesses.
Earlypay is only too happy to help protect your business by raising awareness of these scams and providing beneficial tips on how to avoid it.
What is Invoice Fraud?
It’s a scary-sounding term with scary consequences; invoice fraud is a criminal act where fraudsters redirect payment of your outstanding invoices to their own personal bank account details by impersonating your business or employees, or even a supplier or vendor. The most common form of invoice fraud is payment redirection scams. These payment redirection scams are bold, and the scammers are ruthless, requesting money rightfully owed by you, to be paid into a fraudulent account.
Who is at risk of invoice fraud?
If you think scammers just go after big business, then think again. Invoice fraud affects firms of all shapes and sizes and can impact any industry. Scammers tend to target business employees or volunteers at a junior level or new as they’re most likely unfamiliar with payment processes.
How does invoice fraud happen?
Fraudsters are both conniving, and they’re opportunists. Often, they will be aware of how the procedure unfolds between you and your supplier, or you and your client — even the due date of regular payments.
Invoices are often sent via email — and those who commit invoice scams use this to their advantage. Email addresses are easy to counterfeit. If your business is unlucky enough to have flimsy cyber protection or have a computer infected with malware, then your genuine email addresses can be accessed by criminals.
The ACCC’s body for monitoring scams, the aptly named ‘Scamwatch’ organisation, reported that in one instance, an invoice fraud victim lost over $16,000 in a single transaction after a scammer used the email of a staff member to send an invoice with ‘updated bank details’ to a customer. Little did the customer know that those updated bank details sent the funds directly into the scammer’s financial lair.
How can you avoid invoice fraud?
We have compiled the top five ways you can work to avoid invoice scams hitting your bank account and bottom line:
Use a robust invoicing system
If your business is a one-person show and hastily sending invoices for collection, consider how you can better manage your bookkeeping to set up a robust invoicing procedure, including using a professional invoice. You might also like to utilise Earlypay’s debtor financing options.
Conduct regular audits of your accounts
Recovering funds lost to invoice fraud is made difficult by how quickly scammers move funds around. You can help identify any potential losses or weaknesses in your invoicing system by keeping your finger on the pulse of your business accounts.
Educate clients and staff about payment redirection scams
The best defence is knowledge. Teach your clients, suppliers and staff about fraud and what to look out for.
- Never rush a payment — fraudsters love to create a sense of urgency to get your clients to pay up immediately.
- Always ask your clients to verbally confirm any request to change payment details with a trusted contact phone number of yours — do this for your suppliers as well.
- Educate all your staff in your processes and to look out for any suspicious emails or phone calls.
Invest in Cyber Protection
If you have overlooked cyber protection for the sake of cost, consider the cost of not having your business emails protected by malicious software.
Keep up to date and report any scams
The ACCC's Scamwatch website helps you learn how to recognise, report and protect yourself from scams. By reporting scams, you're helping other business owners just like yourself.
If you'd like to learn how Earlypay's Invoice Finance & Equipment Finance can help you boost your working capital to fund growth or keep on top of day-to-day operations of your business, contact Earlypay's helpful team today on 1300 760 205, visit our sign-up form or contact [email protected].