3 Types of Invoice Fraud Compleat AP Automation Helps Prevent
June 06, 2022

Invoice fraud is a real & immediate threat for businesses worldwide. It’s responsible for over £9 billion of losses within small & medium-sized business every year in the UK alone, & according to research by Tungsten Network, 54% of businesses view it as their biggest threat.

With the strictest measures in place to combat invoice fraud, the most diligent businesses still fall prey to fraudsters. Even Facebook & Google aren’t immune. In 2019, a man pleaded guilty to single-handedly scamming the tech giants out of no less than $100 million over the course of several years.

How did he do it? A fake company, fake emails, & one simple key to the entire scam: some very convincing fake invoices.

Manual AP processes make it harder to spot fraudulent invoices before it’s too late. Large volumes of invoices arriving in multiple staff members’ inboxes & informal approval processes are just a couple of major barriers.

But thankfully, there’s light at the end of the tunnel. A bright & dazzling light in the form of Compleat AP Automation.

Here are 3 common types of invoice fraud & explain how AP Automation software like Compleat can help combat every single one of them – really!

1. Duplicate invoices

Duplicate invoices are simply lookalike versions of vendor invoices with altered bank details. You know… the ones in the practically microscopic, small print.

Fraudsters will create duplicate invoices for common workplace purchases, like paper, subscriptions, or generic consultancy fees.

At a glance, everything looks above board. Duplicate invoices can breeze through your manual approval process until finally an unwitting financial controller issues payment into the fraudster’s pocket.

For Fraudsters, it’s simple, all-too easy, & fool-proof – until AP Automation gets involved.

Compleat AP Automation’s Solution

Compleat’s bank detail verification feature detects a potentially nefarious invoice as soon as it arrives in your company & prevents it from progressing any further until your Finance team has investigated.

Compleat does this by extracting the bank details on every invoice & comparing them to the bank details saved against your supplier in your finance system.

If the bank details match, Compleat displays a green piggy bank against the invoice.

If there’s a bank details mismatch, the piggy bank is red & you can’t process the invoice unless you take steps to resolve the duplication error.

Green light, go. Red light, stop.

There’s also invoice matching to take into consideration. Compleat automatically matches every vendor invoice with its corresponding order in the system. With no matching order, an invoice carries a matching error.

2. CEO fraud

CEO fraud is when a criminal impersonates the CEO of a company & sends an email to their employees authorizing an urgent payment.

Something along the lines of:

“Hi Paul. This deal needs closing immediately. Please follow this link for payment instructions.”

They’ll often follow this up with contact from a third party confirming the urgency of the payment & legitimizing the request.

Catch a Finance team on a busy day & this kind of seemingly innocent request can prove fatal – particularly if a fraudster can write a convincing email.

Compleat AP Automation’s Solution

Compleat AP Automation provides a central hub for financial control, where a payment can’t be made until it has been approved – often by multiple approvers.

Formalizing the approval process by adopting AP Automation creates a culture within a Finance department in which payments made outside of that process are few & far between.

What’s more, in the case of legitimate online payments where a physical purchase order might not always be present, best practice is for AP users to quickly create orders & submit them for approval in Compleat.

In short, AP Automation can eliminate unapproved & unscheduled payments, period.

3. Fake lookalike companies

Also known as “shell companies”, these only exist on paper & don’t actually provide any services.

Technically, a shell company is a legitimate business entity; start-ups often use shell companies to raise funds while they’re getting off the ground.

Fraudsters, however, can easily set up shell companies & create realistic invoices to convince people they’ve provided a service for them. They’ll often create a shell company with an almost identical name to an existing vendor, enabling them to slip lookalike invoices through a company’s Finance department.

What’s perhaps more terrifying is that this type of fraud can often be orchestrated from within a company. If an employee can get a shell company authorized as a legitimate company within their Finance department – & they’re not too greedy with the amounts they bill for – there’s no telling just how long they can keep their scam ticking along.

Compleat AP Automation’s Solution

Every invoice received in Compleat from a new or unrecognized supplier must be onboarded correctly.

Even bearing a remarkably similar name to an existing vendor, an invoice from a shell company is going to be flagged as an unknown supplier in Compleat.

In the unlikely scenario that this wouldn’t raise suspicion within a Finance team, the phoney invoice would still encounter Compleat’s bank detail verification feature & flag the red piggy bank. Remember that? Red means stop.

Again, Compleat invoice matching can catch an invoice that doesn’t have a corresponding order in the system.

That’s a lot of towering hurdles for a fraudulent invoice to jump.

Compleat AP Automation as your invoice fraud solution

We’re not saying you should rely on AP Automation alone.

Regular audits, fraud training for employees, fraud risk assessment, & vigilant data monitoring are all best practice for running a fraud-savvy Finance department.

But there’s no denying Compleat AP Automation’s sheer prowess in smoking out a fraudulent invoice.

Centralizing & automating your AP Process in Compleat immediately equips you with an impressive roster of automated anti-fraud tools.

  • Duplicate invoice alerts
  • Bank detail verification & alerts
  • Multiple digital approvals
  • Supplier onboarding & recognition
  • Full visibility of where very invoice originated.

The best bit? That’s just one tiny part of what Compleat AP Automation can do for your Finance department.

Check out Compleat AP Automation or get in touch with us to find out more.