Improving Your Ability to Uncover Vendor Fraud
Vendor fraud is a term that spans a broad range of abuse – from fraudsters who create fictitious companies and submit bills to you for payment…to trusted suppliers who pad invoices and charge you more than they are due. Vendors involved in fraudulent activity may even collude with your own employees to help them navigate through your company’s internal controls.
Vendor fraud is rampant in accounts payable because that’s where the money is. And studies show the impact is staggering. According to the Association of Certified Fraud Examiners, U.S. organizations alone lose approximately $65 billion annually to fraud – or an estimated 5% of their revenues.
Common Types of Vendor Fraud
- Vendor Masking. Companies use tricks of the trade to hide their true identity. This makes it harder to detect fraudulent activity and recover lost funds.
- Inside Job. Current or former employees with knowledge of your internal controls use that information to perpetrate fraud without being detected.
- Flying Under the Radar. Criminals avoid detection by using “proven” techniques for blending in with legitimate invoices, vendors and payments.
- Organized Crime Billing Schemes. Sophisticated groups of criminals take a savvy, organized approach to defrauding your company.
Read more about a few signs that your company could be at risk for fraud. There are steps you can take to stop potential fraudulent activity.
Another proactive approach is protecting revenues through accounts payable. It includes steps such as actively monitoring and testing controls.