UK small and medium sized businesses are losing more than £9 billion from invoice fraud every year, this amounts to £1,658 per SME, research by Tungsten Network shows. Of those that have been affected, one in six firms believes fraud has cost them more than £5,000 in the last year alone. With the scale of fraud rising, half of businesses are concerned about this and viewing it as their single biggest threat, even more so than losing a major contract, a member of staff or competitor activities.
Almost half of the 1,000 companies surveyed have received a fraudulent or suspicious invoice in the last year with tactics including: viruses embedded in attachments; unknown invoices attached to an email or sent by post; false changes to bank details; and sending duplicate invoices.
Tungsten’s research exposes the need to crack down on fraud in the UK and is backed up by the Government, which in February launched a new taskforce to combat fraud of all types. Its launch shows the scale and seriousness of the situation and the Government’s desire to identify and remove weak links in the UK’s financial systems and processes.
Not every company is aware of the high stakes – 8 per cent of businesses would take no action if they received a suspicious invoice and 13 per cent of micro businesses wouldn’t know what to do. Only 44 per cent of businesses would contact the police or a reporting service like Action Fraud, showing that there is still a gap for fraud education in terms of knowing how to handle cyber-crime.
Small steps that SMEs can take to protect themselves include:
- Electronic invoicing which can help battle invoice fraud as only confirmed suppliers can upload their invoices and then these are validated before they are paid.
- Only deal with suppliers and customers whom you are sure of their identity, if there are any doubts at all, double checking this could save you time for the future.
- Raising awareness within the company and with employees of invoice scams and how to recognise it before it happens.
- Having a clear procedure of what happens when fraud has taken place within the company and knowing where and how it should be reported.
Know who you’re dealing with using Experian Business Express before your enter into business relationships with them, whether this be customers or supplie