Frauds by Duplicate Invoices
Updated on Wednesday 22nd February 2023
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Fraud by duplicate invoices is one of the most common schemes through which money can be diverted from the correct recipient to an undesired one. This usually occurs when the verification systems put in place are not correctly calibrated or the individual verifications are not completed as they should be.
Can double invoice fraud be discovered or prevented? The short answer is yes, however, for this to happen a lot of attention and performant software is recommended. PAID Analytix has developed such a solution through which such issues can be addressed in a fast manner, thus preventing further financial losses.
Can double invoice fraud be discovered or prevented? The short answer is yes, however, for this to happen a lot of attention and performant software is recommended. PAID Analytix has developed such a solution through which such issues can be addressed in a fast manner, thus preventing further financial losses.
The most common double invoice frauds and errors
Duplicate invoice frauds can be hard to discover when employees must verify hundreds of financial documents every day which is the case of many companies. However, there are also cases in which double invoicing occurs without any third party being involved in fraudulently taking money out of a company. Either way, the most common errors and frauds associated with double invoices are:
- the use of multiple invoicing methods which can give way to both mistakes and fraud;
- the misclassification of invoices which can enable the possibility of diverting money;
- bookkeeping mistakes and rounded amounts of money on invoices;
- printing errors can also make room for duplicate invoice frauds to occur by enabling the possibility of issuing a duplicate invoice.
For most of these situations, an automated overpayment recovery software can be the answer to detecting errors and leading to investigations that can uncover double invoice fraud.
Double payments are one of the warnings that a fraud is occurring. However, this can also a one-time situation due to human error. In order to determine fraud patterns, accounts payable audits can be completed in order to establish the reality or to track potential attempts of taking money out of the company.
False and inflated invoices – the red flag of duplicate payment frauds
When dealing with fraud by duplicate invoices, there are two ways these can happen: by issuing false invoices or by emitting inflated ones.
In the case of false invoices, the following aspects can raise some questions:
- they are incomplete (they are not dated, some fields can be left blank);
- the invoices are not accompanied by supporting documents, such as purchase orders;
- the invoiced items do not match the supporting documents;
- the quantity and the price per item do not match the information on the invoice.
Also, when multiple payments are made to the same vendor in the same period of time can be a sign of fraud by double invoice.
There are also cases in which multiple invoices with the same number and amount can lead to the discovery of a duplicate invoice fraud.
In order to prevent the processing of duplicate invoices, the accounting department must first recognize them. This can be difficult, as fraudsters can use data from existing invoices and subtract money from companies. These can also take the form of duplicate payments that can be prevented through various means.
Such problems can be easily uncovered with the help of our accounts payable fraud detection software which relies on Artificial Intelligence for quick verifications that can indicate financial losses and the way these occur.
We also offer accounts payable audit solutions to help prevent financial losses.
Why is automated software the answer to fraud by duplicate invoice?
Putting in place enhanced accounts payable controls is the goal of many medium and large-sized companies that have gone through important financial losses in the past few years and automated software can now be used to improve these processes even further.
Not only is an automated overpayment protection software more efficient, but it will also help the staff in the accounting department, it will centralize and sort all important data, and most of all, it will no longer depend on manually introduced information and paper that can be damaged.
When it comes to fraud by double invoicing, automated software will indicate all the warnings necessary to make all the verifications that can lead to the source of the problem in the shortest period of time, and thus enabling the financial recovery process as soon as possible. In the long term, an automated accounts payable control will also help a company save money.
PAID Analytix proposes an AI-based software that will customize the interaction of business owners with the program so that they have access to the information they need in the shortest timespan possible.
Duplicate invoices are an important source of financial fraud
Double invoice fraud can occur anytime, and it has become a major problem for large companies dealing with huge numbers of invoices on a yearly basis. According to a report issued by AuditNet, for a company receiving invoices worth 75 million USD per year, the losses generated by false and duplicate invoices can be 1.5 million USD.
Some examples include:
- a large German company that was defrauded of 44 million USD;
- another US company was defrauded of 3 million USD by a former employee and his wife.
If you need information on how our software can help you discover fraud by double invoice and how you can further prevent such losses from occurring, please contact our specialists.
Radu Fertonea is the founder of Paid Analytix and Senior Manager with Executive MBA degree (Maastricht School of Management). He was director of operations at Societe Generale European Business Services, in charge with: Management of the Source to Report practice (Procurement, Accounts Payable, Accounts Receivable, Management Accounting) | Global redesign of end-to-end source to report activities | Consolidation of the Finance exercise for the European operations of Société Générale (100% coverage target by 2020) | Transition Management, Process Standardization and Continuous Improvement | People Management – team of 150+. With a broad experience in the financial field and after working with large societies which handle thousands of payments every year, came up with the idea which led to the creation of Paid Analytix.
