Invoice Fraud Prevention: Three Steps That Actually Work
If your business pays invoices, you’re at risk.
In 2024, Americans reported $16.6 billion in internet-crime losses to the FBI. Business Email Compromise (BEC), the scheme where fraudsters impersonate vendors and change payment instructions, accounted for $2.77 billion of that amount.
According to the ACFE’s Report to the Nations 2024, organizations typically lose about 5 % of revenue to fraud annually. The median loss per fraud case is roughly $145,000, and schemes often stay hidden for about 12 months before detection.
Here are three concrete steps (with “do this” actions) you can adopt to disrupt the most common invoice-fraud schemes.
1) Disallow “payment change” via email and force a call-back
Most frauds begin when a vendor’s email is spoofed or compromised, and attacker sends an “urgent change your bank account” invoice. Turn the tables: require out-of-band verification.
- Use a phone number you already have on file (not the one supplied in the suspicious email).
- Record who made the confirmation, when, and what number was used.
- Only after this second step can any change be accepted.
That simple rule directly blocks the BEC playbook that drove $2.77B in 2024.
2) Make tips frictionless and train frequently
Most frauds get caught not by software, but by people. In fact, 43 % of fraud cases are detected via tips, more than any other method. Organizations with a tip line or hotline report lower median losses than those without.
Do this:
- Offer an anonymous hotline, internal web form, or “Report Suspicious Invoice” button in your AP interface.
- Publicize it regularly.
- In every quarterly training, show two real (sanitized) red-flag invoice examples.
3) Strengthen your matching and controls
More than half of fraud cases involve weak or overridden controls, per ACFE data.
One control to tighten: require a “three-way match” for services as well as goods. That means before you pay, you reconcile three things:
- The Purchase Order (PO) or contract laying out what was purchased / what services were to be done.
- A proof or sign-off that goods were received, or that the services were completed to specification (e.g. by the manager or team who contracted the work).
- The invoice itself.
When all three align (quantities, rates, deliverables, dates), payment goes through. If there’s discrepancy (e.g. hours billed not matching the approved scope) it gets flagged.
Other helpful practices under this umbrella include,
- Split duties so the person who creates or edits a vendor record cannot approve payments.
- Monthly audits of your vendor master: duplicate names, sudden bank changes, nearly identical names.
- Controls around override paths (e.g. extra approval if someone tries to bypass normal workflows.)
How technology teams can help
At Fizen, we weave in invoice fraud prevention controls at multiple levels; from email and identity security, to approval workflows, to vendor data hygiene. If you use systems like Egnyte or others, we help plug in version tracking, audit trails, and integrated checks so every change is visible before money leaves your coffers.
How Fizen Technology Can Help
When you partner with Fizen Technology, you’re not just outsourcing IT, you’re gaining a team that’s committed to staying sharp, so your business runs smoothly. Our team has demonstrated the ability to achieve substantial savings for organizations of all sizes. In prior engagements, we have consistently reduced costs while increasing efficiency and governance.
If you’re facing rising or unpredictable bills implementing IT, Fizen Technology can help assess, optimize, and govern your AI strategy for long-term success.
Contact us to learn how these optimization strategies can unlock savings for your business.