From whaling, fake invoices, fiddled expenses, scammers are barraging finance teams from all sides, hoping to compromise the financial heart of the business.
A recent report by the invoicing firm Tungsten Network found that invoice fraud is costing the average UK SME £1,658 per year and that 54% of businesses see it as the biggest threat they face. Stats from the government’s Financial Fraud Action found one-in-four British businesses have fallen victim to scams.
It makes for dire reading. And according to Compleat Software’s Neil Robertson, these figures are likely not the whole story. “Fraud is a far more common than anybody is aware of,” he said. “The reason being is that if you’re vulnerable to fraud, you address it -- but from a finance perspective, you won’t be shouting about it.”
Robertson views manual invoice processes as a big culprit behind the enduring prevalence of invoice fraud. Humans are flawed and, especially in a larger business, it’s easy for things to slid under the radar.
“A recent example I know of happened at a mature mid-size company. The FD run an analysis between the payroll bank account details and supplier bank account details. He found four accounts that matched. One invoice was a small value that was put through for ten years, and it cost the business nearly £10,000.”
The other common scam is invoice creep. The supplier incrementally increases the prices. So instead of charging the agreed £5,000, they might put £5,600 on the invoice. If it’s picked up, then it’s easily explained away, but if it slips through the net then, well, that’s a nice bit of extra cash.
“These are vulnerabilities that in most cases won’t kill the business, but it’s little nicks here and there, where people are taking money they aren’t entitled to,” said Robertson. “If the finance team isn’t responsible for this -- who is?”
Where Robertson sees most promise is AI. Artificial Intelligence has become gimmicky in the accounting space, but Robertson views it through a mundane lens. “Digital invoices or PDFs are really strings of data. AI tech is about reducing the time that it takes to intelligently look at a string of data.”
“The invoice process at many businesses is no different from what it was in the 90s, the 80s, the 70s. About 70% of SMEs are manual. In the UK we are so far behind other regions. The automation of invoices happened a decade ago in places like Scandinavia.
“I’m not saying the people aren’t dedicated and they aren’t doing their best, but there’s a limit to human ability.”
About Francois Badenhorst
Francois is a writer, editor and broadcaster specialising in business.