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Invoice scams and its risks to SMEs

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Published by:
David Armstrong
Published on:
November 30, 2021
Modoras Accounting (SYD) Pty Ltd ABN 18 622 475 521
Invoice scams and its risks to SMEs

A new survey has revealed that nearly one in five small and medium-sized enterprises (SMEs) have fallen victim to fake invoices.

The survey — conducted by Xero and based on data from 1,000 SMEs — found 18% of businesses have mistakenly paid bogus invoices, losing an average of $15,467.

Asked whether they could identify a fraudulent invoice, only two in five respondents were confident they’d be able to spot one.

This finding reinforces the need for e-invoicing to be widely adopted in Australia, says Xero Australia and Asia Managing Director, Joseph Lyons.

What is e-invoicing

Electronic invoicing or e-invoicing is the automatic exchange of invoices between accounting software. Electronic invoicing does not involve emailing invoices, nor is it a PDF invoice.

Rather it’s the ability to electronically submit invoice data from one party’s accounting system to another’s, regardless of the software used to generate the invoice.

“Emerging tools like e-invoicing have the potential to create a safer and more effective way to manage invoices and bills,” says Mr. Lyons.

How to combat invoice scams

If your business hasn’t started e-invoicing yet, there are still things you can do to guard against invoice scams.

The Australian Cyber Security Centre (ACSC), a government agency, recommends you slow down and take time to verify the supplier’s identity.

Among the ACSC’s tips are:

  • be wary of emails that were unexpected, for example an invoice from a supplier you haven’t dealt with in a while, or a payment amount that differs from previous amounts,
  • teach your staff to look out for other red flags of invoice-scam emails like:
  • the supplier has provided new bank details,
  • urgent payment is requested, or
  • you’re threatened with serious consequences if payment isn’t made,
  • the sender is someone in a position of authority, particularly someone who wouldn’t normally send payment requests, or
  • the email address doesn’t look quite right. For example, the domain name doesn’t exactly match the supplier’s company name.
  • Double-check the details by looking at previous correspondence.

Protect yourself. Get expert advice

If you have received an email or invoice that appears to be suspicious, contact IP Australia or report it online via ACSC website.

Looking to make the switch to a more secure way to invoice like e-invoicing? We can give you a second opinion on your accounting software and advise you what to do to ensure it delivers all the services and functionality your business requires.

Contact us for a complimentary consultation at info@modoras.com  or 1300 888 803.

IMPORTANT INFORMATION: This blog has been prepared by Modoras Accounting (SYD) Pty Ltd ABN 18 622 475 521. The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals’ personal circumstances have been taken into consideration for the preparation of this material. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Accounting (SYD) Pty. Ltd. recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this blog can change without notice. Modoras Accounting (SYD) Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Accounting (SYD) Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Accounting (SYD) Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication. Liability limited by a scheme approved under Professional Standards Legislation.

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