How to protect your business from supplier fraud

What is supplier fraud?

Supplier fraud is a broad term that encompasses a variety of dishonest activities committed in order to obtain money or information from a business.

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Common instances of supplier fraud include:
•       Intentionally double billing for the same work (usually under different invoice numbers to make detection more difficult)
•       Advance fee fraud, whereby fraudsters insist on up-front payment for goods/services, but never deliver the good/service
•       Notifying a business that a customer or supplier’s bank details have changed in order to direct money into the fraudster’s account
•       Office supply scams whereby fraudsters try to trick employees into paying for office supplies the business has not actually ordered
•       Fraudsters sending out official-looking letters and emails to businesses in order to gain access to bank account information

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How to protect against supplier fraud

The National Fraud & Cyber Crime Reporting Centre estimates that as many as 675,000 UK business have fallen victim to some kind of supplier fraud in the course of daily operations.

Part of the reason for this high incidence of fraud is that many business owners and employees are unaware of the existence of fraud targeting business, so are unable to spot the potential warning signs. Most people are aware of doorstep fraudsters trying to pass themselves off as utilities employees looking to gain unauthorised access to your home, and of so-called ‘cowboy-builders’ wrecking homes. However, there is a far lower level of public awareness and training in relation to corporate fraud.

Therefore, the best way for businesses to protect against supplier fraud is to educate employees about its existence, and to implement standard operating procedures for identifying and dealing with fraud.

These may include:

  •      Implementing a verification process for new suppliers and customers in order to check that they are a legitimate and honest business. This can be as simple as doing an internet search or contacting other businesses in the same line of work to find out if anyone has worked with a specific supplier or customer before, and what their experiences were.
    •       Investing in an effective supplier management software, such as the one provided by https://www.contractswise.com/, in order to keep track of purchase orders, invoices and billing.
    •       Providing training for staff in order to raise awareness of some common fraudster techniques and help them identify a potentially fraudulent call or email.

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