What is billing fraud? It can be described as an employee creating a fake invoice or inflating an existing one to submit and get paid.
Most people think they will never be scammed, and then they are. Non-profits and religious organizations often get hit by billing fraud because of not putting basic internal control systems in place. And, while for-profit businesses have various “levers to pull” if something goes wrong, non-profits rely heavily on donors for income. On top of that, it might be difficult to adjust prices at service-oriented establishments.
To help catch unsuspicious scamming early on, we reiterated the need for systems of internal control within a business. There’s a great crime assessment portion that walks you through preventative steps. Every duty should be handled by three people: one employee authorizing the transaction, one employee recording the transaction and one employee doing the reconciliation or checking on the account.
Separation of duties is an important business tactic. Don’t let the person who receives the payment be the person who controls the invoice. Additional precautions include locking down prior invoice periods and assigning specific usernames and passwords to employees.