eInvoicing reduces the risk of invoice fraud
Published: 06 September 2023
All organisations, regardless of size, are susceptible to invoice fraud. There are potentially devastating impacts to your bottom line, cash flow and reputation.
So, it’s not surprising that security is one of the biggest drawcards of eInvoicing.
eInvoicing is the secure, digital exchange of invoice information between suppliers’ and buyers’ accounting systems. This means no more PDFs, email, paper, and manual data entry; removing associated risks like PDF file attachments being intercepted and tampered with.
That’s just one advantage of eInvoicing and more businesses are catching on. The Ministry of Business, Innovation and Employment’s (MBIE) latest Kantar Public research found that 33% of respondents agree that security is one of the top benefits of eInvoicing. eInvoicing users also agreed that invoices won't get lost (51% vs 33% for non-users) and eInvoicing will save time (73% vs 49% for non-users).
So, why should businesses be concerned about invoice fraud?
Invoice fraud losses commonly occur from:
- Unauthorised access relating to invoice scams - involving direct tampering with legitimate invoices, or fraudulently accessing accounts. This usually means emails have been compromised; or
- Being asked to pay money upfront – which involves receiving fake invoices, and being asked to pay upfront, before receiving the goods or services.
According to CERT NZ, in the last year New Zealanders have reported total financial loss of $8.2million for both ‘unauthorised access’ and ‘asked to pay upfront’ scams. While ‘unauthorised access’ accounts for $4.6million of that, the scams asking you to pay upfront are far more prevalent in absolute numbers - accounting for 74% of total incidents. This suggests more businesses may experience this kind of scam.
Invoice fraud is increasing. According to the Australian Competition and Consumer Commission, Australian businesses lost $227 million to payment redirection scams in 2021, a 77% increase compared to 2020.
What’s more, not all invoice fraud is reported. This is just the tip of the iceberg.
Small businesses are particularly vulnerable as they typically have fewer reserves to bounce back from invoice fraud. Particularly when you consider the impacts extend far beyond just losing money. Repercussions can include impeded workflows, stalled businesses development, customer trust impacts and legal liability.
The fact is, eInvoicing is an easy way to help reduce this risk. As well as removing the need for paper or emailed invoices that can be intercepted and tampered with, eInvoicing provides the following robust protections:
- eInvoicing sender and receiver details are validated, audit logs kept, and strict protocols are followed to ensure invoices remain secure when sent across the network. And, because eInvoices go directly into the buyer’s financial system, they are assured they’re approving and paying genuine invoices that haven’t been compromised or tampered with.
- The eInvoicing network has robust, multi-layered security requirements including encryption, security certification (ISO27001 or ASD/NZISM), Know Your Customer (KYC) compliance, NZBN (New Zealand Business Number) validation, and accreditation of network providers by MBIE. This provides significant protection as well as ensuring traceability of any fraudulent invoices.
- Invoices remain private and confidential and can’t be forwarded by email – only people with accounting system access can see the invoice.
- Data privacy is further enhanced as invoice information can only be accessed via systems which usually have user login audits logs available. This makes it difficult to discretely or accidentally forward on any sensitive data to outside individuals compared to when using email to send invoices.
eInvoicing isn’t a fix-all solution, but it is cost effective and easy to put in place to help reduce the risk of invoice fraud. Plus, you get to enjoy the many other benefits eInvoicing provides for your business.
Join the thousands of other NZ businesses already realising the benefits of eInvoicing. Check if your software has eInvoicing capability, register to receive eInvoices and send and receive eInvoices with your trading partners.
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