I recently read yet another two disturbing reports about invoice fraud. At least two entrepreneurs in Nieuwkuijk and a garden center in Leuven were the victims of fraud involving bills sent through the mail. Invoice fraud is commonplace, but actually easy to prevent.
The cases in Nieuwkuijk and Leuven make it clear that invoice fraud with paper invoices is still happening. In both cases, the paper invoices were intercepted and the bank account number adjusted. Such invoices are hardly distinguishable from the original invoices and sometimes slip through the accountspayable department. Payment is then made unthinkingly to the criminals' bank account number, resulting in a lot of trouble.
Those who think this type of fraud is limited to paper invoices are wrong. It can also happen with intercepted digital invoices. The best-known form is the pdf or xml invoice sent by e-mail. This passes, technically, through several e-mail servers of which only about 50 percent are encrypted. On any other server, criminals can intercept, alter and forward the pdf invoices. Through address spoofing, it is even possible to send an e-mail on behalf of someone else.
Abuse with e-invoices
Using electronic invoices (xml) with a secure connection makes fraud much more difficult. But if it does happen, it can have major consequences. The purpose of electronic invoicing is touchless processing: the invoice moves fully automatically from the supplier's financial system to the customer's financial system, is matched with the purchase order and then paid fully automatically. A wonderful example of a robotized process that no longer requires the use of human hands and eyes. But this also makes it a process where abuse is lurking and can take a lot longer to discover.
If the electronic invoices are somehow intercepted in transit, criminals can provide them with their own bank account number. Criminals can also sling a phantom invoice into the market with a value of only a few hundred euros, so that the recipients do not have to do much manual checking and often pay automatically. If only five percent of the ten thousand hundred-euro phantom invoices sent are paid, the criminals will make fifty thousand euros. Easy money.
Automatic checks
Companies and institutions can prevent this with automated control mechanisms for electronic invoices. Only then can they be sure to pay invoices to the correct payee. Such automated checks are easy to set up.
After all, the content of electronic invoices can easily be automatically compared with the supplier data as known to the customer. If the combination of name, VAT number and IBAN on the invoice does not match the data in the system, an invoice sent by criminals with a modified IBAN will automatically fall out. Accounts payable can then contact the supplier to verify that the IBAN has changed. If not, the company or institution can contact the police Fraud Help Desk.
Robotization
Thus, with the robotization of invoice processing, it is very important to detect fraud quickly. A so-called e-invoice operator or Billing Service Provider can play an important role in this. These sit as dynamic linking points between invoice senders and invoice receivers. They translate incoming messages into formats they know the recipient can handle. Such a party receives and sends a large number of invoices and can use big data to identify high-profile fraudulent cases.
With the embrace of electronic invoicing and its control mechanisms, we can again further reduce crime. It benefits the bottom line and makes people feel safe. And in these disruptive times, that's another great thing.