Invoice Scams: How to Detect and Prevent Invoice Fraud in Your Organization?

28 November, 2022
10 mins
Terri Miller, Director of Business Operations

Table of Content

Key Takeaways
What Is Invoice Fraud?
How Does Invoice Fraud Happen?
How to Identify Fake Invoices: 5 Key Signs of an Invoice Scam
How to Prevent Invoice Fraud?
How Automation Can Help
What to Do If You Already Paid the Fake Invoice?
How HighRadius eInvoicing Solution Prevents Invoice Fraud

Key Takeaways

  • Invoice fraud, or invoice scam, is a deceptive practice involving fake or altered invoices for personal gain, potentially redirecting funds away from legitimate parties.
  • Spotting fake invoices can be challenging, but key signs include discrepancies in vendor details, payment information, invoice contents, and unusual number patterns.
  • To prevent invoice fraud, train your staff, establish single points of contact with suppliers, verify changes verbally, cross-check invoice details, and automate accounts payable and receivables processes.


In the intricate landscape of modern business, invoice scams have emerged as a formidable threat to organizations of all sizes. Even though these scams might seem complicated, spotting and stopping them is actually quite straightforward. 

In this article, we’ll cover everything about invoice scams from uncovering how to identify fake invoices to tips to prevent invoice frauds. By the time you finish reading, you’ll possess the knowledge and tools necessary to safeguard your organization against invoice fraud.

What Is Invoice Fraud?

Invoice fraud, also known as invoice scam, is a deceptive practice that involves altering or creating fake invoices for personal gain, often at the expense of unsuspecting parties. For instance, it can entail fraudsters misleading your business by claiming changes in a supplier’s payment details, redirecting funds to their accounts.

In some cases, scammers intercept genuine invoices, altering only the bank account information while leaving the rest of the invoice unaltered.

How Does Invoice Fraud Happen?

Invoice fraud often starts with fraudsters gaining insight into the vendor-organization relationship. They become familiar with key details like the typical timing of vendor invoices and payment schedules. Once they have this knowledge, they employ cunning tactics to breach a company’s email system or database, where they unearth sensitive payment information and other confidential data.

Their focus narrows onto specific elements of invoices, such as the invoice number, banking details, or the designated payment destination. What makes their deception so challenging to detect is their expertise in making subtle alterations that slip under the radar.

Adding to the deception, scammers frequently target invoices from vendors well-known and trusted by the company. Invoices come with payment deadlines, often spanning 7 to 90 days. Scammers exploit this timeframe to create a sense of urgency. They create a façade that implies an immediate payment necessity, causing the individual responsible for settling the bill to rush through the process, possibly missing crucial details.

The complexity of invoice fraud lies in its ability to take on various forms, with scammers perpetually devising new tactics to dupe businesses. That’s why vigilance is crucial in spotting any signs of invoice fraud, regardless of its appearance.

How to Identify Fake Invoices: 5 Key Signs of an Invoice Scam

Invoice fraud detection or spotting fake invoices can be a real challenge, especially when your company deals with a high volume of invoices and relies on manual processes. In such scenarios, carefully examining every invoice for these telltale warning signs is a daunting task. Nonetheless, here are the top five indicators that can help you determine the authenticity of an invoice:

  1. The vendor’s contact information or payment address differs from their previous invoices.
  2. The payment or bank account details for the vendor don’t match their prior invoices or records in your ERP system.
  3. There’s a discrepancy between the invoice image (or other invoice details) and your ERP data.
  4. The invoice is for services that haven’t been provided yet.
  5. When you notice an unusual frequency of numbers, it’s a warning sign that the invoice might be questionable. 

The most effective way to counter accounts payable fraud is by implementing robust checks that flag these red flags. But given the impracticality of manual checks, consider leveraging an e-invoicing and payment software to streamline your invoice processing cycles, reducing the hours spent on processing, approving, and tracking bills. 

This not only minimizes the risk of human error but also facilitates swift communication between customers and suppliers. This communication can be instrumental in identifying, reporting, and preventing invoice fraud.

Recommended Reading: E-Invoicing and Payments Process: A Step-by-Step Guide [+ Free Templates]

How to Prevent Invoice Fraud?

Here are some ways you can protect your business from invoice fraud: 


  • Train Your Staff: Ensure that employees responsible for processing invoices are well-informed about potential risks and know how to respond effectively to suspicious requests.
  • Establish Single Point of Contact: Consider setting up single points of contact with suppliers you regularly pay to streamline communication and reduce the risk of fraudulent requests.
  • Verify Changes Verbally: Confirm any payment change requests through verbal communication with a trusted contact from the supplier’s known contacts. Avoid using phone numbers provided within the request, as they may connect you to fraudsters.
  • Exercise Caution with Payment Changes: Treat any requests to alter payment details with extreme caution. Be aware that even seemingly genuine email addresses can be compromised.
  • Cross-Check Invoice Details: Compare the details on incoming invoices against previous legitimate invoices. Apply the same scrutiny to requests originating within your organization.
  • Beware of Publicly Available Information: Be mindful of what information is publicly available about your supply chain on platforms like your website or social media. Removing sensitive information, such as supplier testimonials, can reduce the information available to potential fraudsters.
  • Automate your accounts payable and receivables processes to enhance efficiency. Accounts payable teams can benefit from automated workflows, including 3-way matching support, improving visibility, reducing fraud, and saving time and money. Similarly, accounts receivable teams can utilize features like e-invoicing, customer self-service portals, automated dunning, and VoIP calls to ensure secure invoices and provide customers with multiple document sources for verifying invoice details.

Implementing these measures can significantly enhance your defenses against invoice fraud.

How Automation Can Help

By following all the ways mentioned above, you can protect your organization from invoice fraud. However, meticulously examining every invoice manually is a challenging task. The solution lies in automation, and that’s where an AI-based E-Invoicing and Payment Software can be invaluable, offering substantial benefits, including a robust defense against invoice scams. 

By automating invoice processing with HighRadius, you significantly reduce the risk of falling victim to invoice scams. The software eliminates the tedious manual handling that fraudsters may exploit.

Benefits of automated invoice processing include:

  • Verification of invoice details for accuracy.
  • Reduction of manual processing errors.
  • Frictionless billing and payments through automated invoice delivery.

What to Do If You Already Paid the Fake Invoice?

If you paid the fraudulent invoice and are confused about what to do next or how to proceed, you can proceed with these options:

  • Keep your cool and start by speaking with the provider. Perhaps there was a mistake, and everything turned out well. In many cases, the supplier may be able to take necessary actions based on your report.
  • Whenever you find or suspect fraud, report it as soon as possible to your own bank and the bank of the fraudulent account number.
  • Report the incident to the police and concerned authorities.

How HighRadius eInvoicing Solution Prevents Invoice Fraud

In the order-to-cash process, invoices are crucial. In today’s fast-paced world, efficiency and security are paramount.

HighRadius’ e-invoicing and payment software streamlines invoice processing, saving time and reducing errors. It also facilitates quick communication between customers and suppliers, enhancing fraud detection and prevention.



1). How do you report invoice fraud?

Report the incident to your bank and relevant authorities and provide evidence of the fraud.

2). What is proof that the invoice has been paid?

Proof is usually a receipt or confirmation of payment from the bank or payment processor or a copy of the cleared check or wire transfer confirmation.

3). What are the consequences of invoice fraud?

The consequences of invoice fraud can be severe, encompassing financial losses, legal liabilities, and reputational damage. This may lead to lawsuits, fines, penalties, audits, investigations, imprisonment, asset confiscation, and the loss of a business license.

4). Which details do fraudsters commonly falsify when manipulating in a commercial invoice?

They commonly falsify specific details such as company logos or banking information, as well as inflating prices beyond agreed amounts. Additionally, they include charges for goods and services that were neither ordered nor received.

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