Keywords: Invoice, fraud, e-invoicing, electronic invoicing, einvoicing

Invoice fraud on the inside

Sarah Feurey | News | 2 July 2012

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When companies think about invoice fraud it is probably threats from outside the organisation that are foremost in their minds. But what about the threats from the inside?

As two high-profile cases in the UK have recently highlighted, disgruntled employees and dishonest managers can pose a serious risk to businesses, especially if their invoicing systems are not as transparent as they could be.

In Lancashire a part-time accounts assistant was jailed for stealing up to £200,000 from her boss to pay for a lavish wedding, having used bogus invoices to channel funds from her employer's bank account into her own.

Kirsty Lane began by diverting small amounts of cash, before growing in confidence and creating false invoices for larger and larger sums. Her actions were discovered when a customer made a complaint about an invoice.

Meanwhile, in Stratford-upon-Avon a woman working for ITC Legal Services has pleaded guilty to submitting false invoices in order to siphon off cash from the estates of deceased individuals.

According to the Stratford-upon-Avon Herald, Jacqueline Hing's fraudulent activities came to light after the company became suspicious about a £4,000 invoice from a firm called Hannows Development, which claimed to have carried out work on a deceased man's home before he died.

An investigation into the invoice found that Hannows Development did not exist. The deceased's daughter also confirmed that no work had been done.

Both of these cases demonstrate the dangers posed from inside a business and the ease with which fraudsters can manipulate invoices to line their own pockets.

Could putting electronic invoicing systems in place help to tackle the problem? They are certainly known to provide greater transparency into purchasing and payment activities, and where suspicions are raised transactions can be tracked much more easily.

But of course switching to e-invoicing does not eliminate the problem entirely, as fraudsters can simply migrate to the digital environment. Being on the lookout for fraud is therefore hugely important to any organisation processing a large amount of invoices.