Business fraud is on the rise as fraudsters have realised that targeting businesses, rather than consumers, can yield bigger pay-outs.
The US Federal Bureau of Investigation (FBI) has estimated that CEO fraud (where someone in the business pays a fake invoice following receipt of an email from someone purporting to be the CEO of the company) has increased by 270% since January 2015 and has cost businesses around the world at least $3bn (£2.3bn) over the past three years.
Having checks and systems in place internally can help detect such emails but what about when you are dealing with other companies?
Procurement fraud (in which a business is charged for goods or services that were never delivered), Bribery (payment for awarding a contract to a particular supplier) or encouraging suppliers to charge over the odds then creaming off the difference - accounts for 88% of total UK fraud losses.
Most fraud of this type relies on there being, within the business, little or no monitoring of the tendering process and whether the terms of the contract have been fulfilled. Often smaller jobs are given to suppliers without any written contract at all and paid for cash-in-hand but a lot of small jobs can, over the course of a year, add up to a large sum of money.
There is one simple thing that you can do to protect your business.
Having a written contract with each of your suppliers, however small the job, makes this type of fraud harder to perpetrate because:
- A written contract creates an audit trail making the business less attractive to fraudsters in the first place
- A written contract can easily be looked at by someone else in the business to assess whether it really is value for money
- Before payment is made, the contract can be reviewed to ensure that all of the goods and services listed have actually been provided
- The message: look after the pennies…I’ll leave you to fill in the rest.
If you would like your terms and conditions reviewed then please do give us a call (01295 661436) or email and we would be happy to help.