Fraud prevention company vendor is a common risk for many businesses, and it comes in a variety of forms. It can be committed by a single bad actor or result from coordinated schemes between employees and an outside vendor. Either way, it can cause significant financial losses.

In one case, a fake vendor defrauded a company out of $700,000 by gaining access to the company’s vendor registration system and changing payment information so funds would go into the fraudster’s bank account instead. This type of fraudulent activity usually involves the manipulation of billing information, but it can also include bogus purchase orders, false invoices or even false website certifications.

Finding the Right Partner: Choosing a Fraud Prevention Company Vendor

Keeping up with the latest sector fraud trends can help you identify potential risks early. You can also take more practical steps to mitigate the risks. For example, digitizing and centralizing your vendor master files will make it easier to keep an eye out for inconsistencies in data. Also, regularly scrutinize invoices for things like a change in payment address to a P.O. box, non-PO or contract matching, a small first invoice to test the waters and other red flags.

You can also reduce the risk by ensuring employees are well-versed in fraud prevention best practices and setting up a hotline so they can report suspicious activity without fear of retaliation. Rotating AP staff and establishing segregation of duties can be important too. In addition, running background checks on new vendors can help detect potential connections or relationships that might open the door for fraud.