Blogs & Articles

Oct 16 2020 Benjamin Williams

Types of Procurement Fraud: Billing Fraud

Fraud in procurement is one of the most common and costly types of fraud that business enterprises can face. A 2014 study by PwC estimates at least 30% of businesses have been victims of procurement fraud. Along with an ACFE study placing the annual global loss at approximately $3.7 trillion, this is no doubt a significant issue for businesses to protect themselves against.

 

 

Procurement Billing Fraud

 

Billing Fraud within procurement involves a supplier sending in intentionally falsified billing invoices. These invoices will most commonly be inflated from the actual price. However, cases of Billing Fraud also include sending duplicate invoices for the same order, or even submitting entirely fabricated billing invoices for orders that do not exist.

 

However, the contractor or supplier sending such invoices is only one part of the overall scheme. In order for Billing Fraud to succeed, these inflated, duplicate, or fake invoices must be approved and paid by the purchasing company without dispute.

 

This is where buyer collusion enters the picture. While it may be possible that such fraudulent billing invoices are overlooked due to carelessness or negligence, this is unlikely to be the case on a frequent and ongoing basis. Instead, suppliers perpetrating Billing Fraud tend to rely on an arrangement with members of a purchasing company’s procurement team who will sign off on these falsified billing invoices in order to receive some type of kickback in exchange.

 

 

Signs of Procurement Billing Fraud

 

Unlike a number of other types of procurement fraud, Billing Fraud is not only possible, but also likely to be caught with appropriate audits. These audits, when conducted properly and regularly, are likely to turn up missing records, deliveries, or even non-existent goods themselves that are otherwise detailed in these falsified invoices.

 

When such records are missing, don’t match the billing invoices sent by your supplier, or are signed off on by your procurement team, it is a sure sign to investigate further. Another certain sign of Billing Fraud includes two or more invoices that match exactly. In such a scenario, these duplicate invoices would share a purchase number, detailed services, or identical pricing. If these happen to appear during any investigation or audit, a full search and explanation as to their source are warranted.

 

 

Enhance Your Procurement Process with TraDove

 

TraDove targets and eliminates the pain points for business Buyers and Sellers, easing the procurement process by matching B2B professionals with the most suitable business partners. Put an end to purchasing urgency, unaligned buying & selling processes, and lack of communication & transparency by finding a supplier at TraDove.com. Let us help you find new markets and conduct simple, secure trades with our own B2B Blockchain Payment Solution!

 

About TraDove

TraDove is a business social networking platform that connects B2B buyers and sellers around the world. Employing its own blockchain and AI-driven social networking technologies, TraDove allows its users to shorten the corporate buyer-seller discovery cycle, enjoy enhanced B2B transparency & user trust, and facilitates company-to-company precision advertising.

Learn more at https://www.tradove.com

Benjamin Williams

Global Communications Manager - TraDove, Inc. - Palo Alto - California - United States

Hello all! I’m an American writer and editor and have been working with TraDove's excellent teams in China, the U.S. and Europe to help develop a best networking site possible for B2B professionals.

0 Comments0 Like