According to Action Fraud, the UK’s national reporting centre for fraud and cyber crime, a staggering 1 in 4 small businesses are affected by fraud every year.
One type of fraud which can (and does) affect small businesses is supplier fraud. Supplier fraud can take many different forms and it does not always involve new suppliers. For example, you may be deceived into re-directing a payment to an existing supplier, you may receive false invoices for orders that have not been placed or inflated invoices for legitimate orders.
However supplier fraud occurs, it can have a significant effect on cash-flow and cause reputational issues. The good news is that are some simple steps that you can take to protect to your business from supplier fraud:
- Know your suppliers – look them up on Companies House, obtain references from others, search the internet for any reports of wrongdoing, pay a credit reference agency to undertake checks;
- Check invoices carefully before authorising payment;
- Establish a single point of contact with your regular suppliers;
- Verify any changes, particularly to payment details, using phone numbers independently obtained and confirm those changes with your contact;
- Monitor supplier behaviour and performance;
- Introduce verification processes (eg a dual authorisation process) to change supplier account details in your accounting system or for large payments;
- Inform suppliers when a payment has been made;
- Check before you sign – are you being duped into ordering more than you think?
- Use your instincts – if something feels not quite right, proceed with caution or not at all.
If you would like some further advice about safeguarding your business from fraud or you have been the victim of a fraud, contact: