What is invoice fraud?
By Tim White · Glossary · Last updated
Invoice fraud is any scheme that uses a fake, altered or duplicated invoice to get a business to pay money it doesn't owe. The common forms are bills for goods never ordered, a scammer posing as a real vendor to change their bank details, and the same invoice submitted twice. Process controls stop most of it.
Common schemes
Phantom invoices bill for something nobody ordered, often a small amount for 'directory listings' or 'domain renewal', betting a busy bookkeeper pays it. Vendor impersonation, a form of business email compromise, uses a spoofed or hacked email to ask you to send future payments to a new account. Duplicate submission resends a real invoice, sometimes with a new number. Padding adds hours or units to an otherwise genuine bill.
Controls that work
Approval from someone who knows the spend, on every invoice above a set amount and on every new vendor. A phone call to a number you already have before changing any bank details. A duplicate check before payment. A monthly look at new vendors added to your system.
Software helps at the edges. InvoiceJet flags exact duplicates and holds invoices whose math doesn't add up. It doesn't know whether you ordered something, and it can't confirm a bank change. Those checks stay with people.
Common questions
What's the most common invoice scam for small businesses?
Bills for services never ordered, and vendor impersonation emails asking to change bank details. The FTC's small business guide, linked below, covers both.
Sources
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