UK SMEs lose £9bn every year to invoice fraud, finds research

Invoice fraud is costing the UK’s small- and medium-sized enterprises (SMEs) over £9bn every year, according to new research.

The study, from e-invoicing and analytics firm Tungsten Network, found that the impact of invoice fraud amounts to £1,658 per SME, with the figure rising to as much as £5,000 for one in six firms.

It was also found that the overall scale of fraud is increasing, with just over half (54%) of companies worried about its rise and considering it the single-biggest threat to their business – ahead of competitor activity or losing a major contact.

The Tungsten Network research collected the opinions of 1,000 SMEs based in the UK.

Of those surveyed, close to half (47%) reported receiving a suspicious or fraudulent invoice in the last 12 months.

The research follows the government decision earlier this year to launch the Joint Fraud Taskforce, a new group consisting of representatives of the National Crime Agency, the Bank of England, City of London Police, Financial Fraud Action UK and the chief execs of the major banks.

Tungsten CEO Richard Hurwitz said: “UK SMEs face all manner of challenges, and it’s telling that cyber crime looms as one of the biggest.

“What’s most troubling is that it needn’t be like this as there are steps companies can take to protect themselves.”

He continued: “Technology such as electronic invoicing can help battle invoice fraud as only confirmed suppliers can upload their invoices and then these are validated before they are paid, potentially saving firms thousands of pounds.”

The findings also revealed that a number of firms are unaware of the high stakes involved in fraud. Fewer than one in ten (8%) said they would not take action in the event of receiving a suspicious invoice, while 13% said they would not know what to do.

Just 44% of respondents would get in touch with the police or an organisation like Action Fraud, the UK’s national centre for reporting fraud and internet crime.

The head of Action Fraud, Pauline Smith, commented: “It is important that employees are made aware of invoice scams and are ready to recognise the signs of fraud. Incidents of invoice fraud are underreported and therefore it is difficult to know the true scale of this fraud type.

“However what we do know is that this type of fraud prevails across all types of business and no one type of industry is immune.”

She added: “Those organisations that are worried they may fallen victim to fraudsters should always report to Action Fraud.”

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