Helping companies avoid invoice fraud

A news item on fraudulent invoicing caught our eye this week as the Annual Fraud Indicator 2012 found procurement fraud cost central government £1.4bn and referred to ‘double invoicing’ in particular.

While there are no fail-safe mechanisms to prevent against fraud, e-Invoicing provides many controls that simply do not exist with paper.

  • AP departments maintain positive control over which suppliers are allowed to submit invoices to them over the network.  Buying organizations can pre-authorize any supplier before it will be allowed to submit invoices to them over the network.
  • AP departments control the vendor number assigned to each authorized supplier. This prevents the supplier’s e-Invoices from being submitted from any other source.
  • Our best practice recommends that customers do not allow suppliers that are set up for e-Invoicing to submit paper invoices; we do this by putting a ’flag’ in the ERP system to alert manual processors to reject paper invoices.
  • The supplier’s billing department controls which individuals are allowed to submit e-Invoices on its behalf.  By implementing an integrated connection – where the supplier sends invoices via a file generated from a billing system and we do not allow them to create invoices directly on our portal – the risk of the creation of fraudulent invoices is almost eliminated.
  • PO invoice validation provides an extra layer of control because it confirms PO-related invoices are submitted by the appropriate supplier.
  • We recommend that buyers access payment details from the vendor master data, not those included on the actual invoice, this ensures the appropriate level of validation and authenticity.

Organizations need to implement all the necessary controls to prevent against fraudulent activity and test them on a regular basis.  Having the right systems in place – like e-Invoicing – enables companies to enforce control and gain greater trust in their processes.

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