E-invoice fraud is on the rise, should we return to paper?
Recent reports suggest digital payments and financial solutions are falling foul of fraudsters. Is this a sign that companies should return to paper? Let’s revisit why we moved away from paper to begin with…
E-invoice fraud: The reality
Earlier this month the BBC reported a sharp rise in cases of fraud involving bogus electronic invoices. Sent by fraudsters posing as company suppliers, these invoices often appear as normal text or spreadsheet files making them difficult to identify.
The original report from Financial Fraud Action UK exposed the growing trend, warning that when opened the invoices contain malicious software which can log financial information and be used to steal funds. At the end of last year there were a number of reports highlighting losses suffered by companies, with one Norfolk based company being cheated out of £350K.
Stories like this can make companies uneasy about transferring yet another business process over to the digital space. Especially when it appears several con-artists are seated in front of laptops, tools at the ready to fleece your accounts for every penny.
Rather than looking back through rose tinted glasses at an age when paper reigned in most areas of business, let’s remember the reality:
Paper invoices get lost
The envelope was sealed, sent first class, the postal service (we won’t name names) promised to have it delivered within 2 working days… 1 week later credit control is on the phone and your customer denies ever having received it… The Association of Chartered Certified Accountants (ACCA) estimated a staggering 30 billion pounds is tied-up in late payments.
E-invoicing solved this by allowing companies to track their invoices and provide evidence that they were sent and delivered – with much cheaper costs.
There was also the security issue surrounding lost invoices and financial data. Unless that postal service (you know the one) has a vortex which sucks letters into a third dimension, they ended up somewhere… which leads on to my next point.
Paper invoices can be read by anyone
If you were lucky, your invoices and financial information would end up in Mrs Good’s mailbox (honest citizen, bakes for the neighbours, wears pastel blue cardigans) – aside from the inconvenience of a late payment, life would remain the same. However, with the latest report by the Office for National Statistics (ONS) highlighting over 309,879 cases of fraud reported by industry bodies, whose willing to take the chance?
You may assume that the information held within your invoices and other documents cannot be used for any undesirable activities. But this may not be the case, I’m fairly certain with an account number, an address and transaction details someone could certainly pose as… well I’ll stop there as I certainly don’t know the recipe for invoice fraud. E-invoicing provides far greater protection as only accredited employees can access invoices, plus all interactions with an e-invoice can be tracked.
Bottom line - if invoices and account information were meant to be viewed by everyone senders then we would probably send them via twitter (cost free and an excellent way to shame late payers).
Paper invoices can be destroyed (unless you’re the recipient…sorry)
Put your lighters down, in most countries the law demands invoices be kept for at least 7 years (for tax purposes), so unfortunately the wall of paper referred to as a filing system stays. Aside from the fact they take up so much space (just imagine the possibilities - you could have a slide like Google HQ), filing paper invoices makes indexing difficult, wastes valuable time and complicates the ability to track payments.
All these factors increase the risk of inaccuracy and inaccuracy is definitely in bed with fraud (I have pictures). E-invoicing provides secure archiving and documents can be backed up which protects against the risk of destruction. Plus they don’t take up any office space – meaning you can move your desk further away from the dodgy member of accounts payable.
Lastly, in case you’ve been left in any doubt that we left paper invoicing for a reason… It’s also bad for the environment – yes, unconverted reader YOU are killing the trees – and for those who haven’t a heart for forest life – paper invoicing also costs far more than e-invoicing.
Do you want to remove paper from your business?