This post continues from the last one where we introduced invoice fraud and showed a few ways in which this fraud can be perpetuated, namely overcharging and false invoicing. In this post, we’ll take the discussion further. So far, we were looking at the types of fraud committed by the vendor without the knowledge of anyone within the organization. However, let’s see a couple of scenarios where fraud is committed not only with the approval of a member of the organization’s staff but also his/her express/tacit approval.
Duplicate invoices: This is one type of fraud that can be committed intentionally or unintentionally. In this scenario, vendors send more than one invoice for the same goods or services. Not knowing that the invoice had been entered into the system and paid off, accounting executives sometimes enter the same details again and pay the vendor one more time. This, of course, can happen with the help of the organization’s accounting staff too. An executive might be helping the vendor perpetuate this fraud, and if the organization has no good auditing policy, it could well go unnoticed.
Solicitations as invoices: Sometimes, clever fraud artists send you invoices which really are solicitations disguised to look so. A solicitation is merely an act of offering a good or service and does not constitute a rendered service. If the staff is not careful, they can be fooled by such solicitations and, thinking that the service or good was fulfilled, pay out the amount. This usually happens with advertising on yellow pages or listings on directories and websites. Though all solicitations are to carry a notice saying that organizations are under no obligation to pay, a corrupt accounting executive might actually help the fraudster by ignoring the notice and paying him off.
This will be continued in the next post where we’ll look at some more fraud types and show how online invoicing software can help you protect yourself from invoice fraud.