SMEs lose £9bn to invoice fraud every year
- Research suggests it amounts to £1,658 per SME.
- One in six businesses believe invoice fraud has cost them over £5,000 in the last year.
Mike Dickinson, sales and marketing director, looks at the risk to SMEs of invoice fraud, the tactics being used by fraudsters and how to avoid becoming a target.
The SME sector is a vital part of Britain’s economy. So, these statistics are worrying given that it appears that SMEs are so exposed to the threat of invoice fraud and the wider issue of cyber-crime.
£9bn a year is an eye watering amount of money which surely damages the performance of UK Ltd. Put in perspective, the UK takeaway sector alone was worth around £9bn in 2014!
The fraudsters can be sophisticated (as well as opportunistic) and prey on businesses whose processes and systems might not be fit for purpose to either block such criminal activity, or negate the effect of theft.
Common tactics that we have come across recently can include unknown invoices being sent to a company either by email or post, targeting an untrained employee who then acts upon a scam invoice, false changes to bank details which channel funds into the criminal’s own bank accounts, embedded viruses in attachments and sending duplicate invoices. This can highlight a disconnect between different departments within a business with no proper system to flag up a bogus or questionable invoice.
To the untrained eye, it’s easy to fall into the trap. These criminals focus on ‘soft’ targets, so added protection for businesses should be considered. SME business owners and managers are notoriously time poor, with the day to day running of their organisations taking all their time and attention – taking on invoice policing duties to spot potential invoice fraudsters would be just an unneeded distraction. The advice has to be assess the risk and protect against it.
Equally, committing to training for employees is a valuable investment. Often, they can be the unwitting enablers who allow the fraudsters to succeed. As they are at the coalface, they need to be given the tools to tackle the crime. Raising their awareness of the problems means they will be able to recognise the signs and act upon them. That includes alerting management who should inform the police or the reporting service called Action Fraud. (www.actionfraud.police.uk).
To many this may seem like an endless onslaught from those determined to extract money and create havoc at all costs. One piece of advice is that there are simple precautions that can help to protect against invoice fraud. Many businesses we speak to are aware of the threat – it’s gathered a fair bit of media attention recently – but for one reason or another, don’t address the risk.
Even something as simple as having a clear desk policy can help reduce the risk of sensitive information being found and used to steal money, or ensure the appropriate due diligence is carried out on third party suppliers e.g. billing or payment service providers, to ensure safeguards are in place to minimise the risk.
The SME team at Russell Scanlan would be happy to talk to you in more detail about what level of protection would be required for your business now and what other threats you could face in the near future. Give us a call and come in for a chat.