Lack of automation and communication gaps means fake invoices are missed and genuine suppliers are getting paid later than ever

New research from Ivalua, a global leader in spend management, has found that almost a third (31 %) of UK businesses have been the victim of invoice fraud in the past 12 months. Of these businesses, just 39 % managed to stop fraudulent transactions before the money was paid out.

The findings lay bare the vulnerability of UK businesses that haven't digitised their invoicing processes. To date, nearly two-thirds (64 %) of UK businesses say that they haven't automated the processes of matching incoming invoices against orders, contacts, and vendor payment information. More than half (52 %) say that without automated invoice matching, organisations are "sitting ducks" when it comes to fraud. 

"Invoicing is an area ripe for fraudsters and cybercriminals. They will typically use low-value invoices that look genuine to direct payments into bogus bank accounts," comments Stephen Carter, Director of Payments Strategy, Ivalua. "Many of these fake invoices are waved through by employees because they look convincing, and the amounts are often below payment thresholds or lower than the expected value. Organisations also face risks from fraudsters working within the business. This insider threat involves senior employees flipping supplier bank details within payment runs to pocket the cash themselves - this activity is hard to track, and ripe for exploitation.

"These scams are not the most technologically sophisticated threats, but they're still happening, so it's clear better safeguards are needed," continues Carter. "By digitising processes, organisations can automate invoice matching against orders, contacts, and block vendor information changes - such as payments or bank details. This allows organisations to segregate duties, remove thresholds and only pay approved suppliers, eliminating the opportunity for fraud."

Closing the communication gap as late payments to suppliers grow  

A key challenge UK businesses face in closing the invoice fraud gaps is communication, with 39 % of procurement leaders saying that there is a huge gap in communication between finance and procurement teams.

This lack of communication is also contributing to delays in supplier payments. Delayed payments put suppliers at risk of collapse, with The Federation of Small Businesses claiming 50.000 UK business closures could be avoided each year if payments are made on time. But despite this, our findings show that:

• Almost half (49 %) of UK businesses are paying suppliers later than they did a year ago 
• 50 % are delaying supplier payments by a month or more
• On average, UK businesses are paying suppliers 26 days later, an increase from 22 days in 2023

A third (32 %) of UK businesses say that they find it hard to tell if suppliers have been paid, while a further 63 % agree that late payments put the organisation at risk of losing key suppliers.

"By paying suppliers on time, organisations can build the trust needed to secure materials and workers, to become the customer of choice. This is best practice, because without total visibility of both cash and suppliers across the whole spend cycle, payments will continue to be late and the risk of fraud will increase, leaving businesses to play catch-up. Meanwhile, suppliers are being put out of business, causing supply chains to grind to a halt. UK businesses need to become more strategic about payments to reduce risk and drive long-term savings," concludes Carter.

“To support our supplier partnerships we are always looking at ways to speed up our invoice processing time,” stated Rob Scriven, Head of Supply Chain at ISG, a global dynamic construction specialist. “Ivalua has helped us to bring the average invoice processing time down from 22 days to 2 days, and we’re still seeing improvement month on month. The number of discrepancies found in invoices has also reduced. This helps us to boost supplier relationships while also reducing risk.”

About the research

The survey was conducted by Sapio Research on behalf of Ivalua from the 29th April to the 10th May. It is based on a survey of 300 supply chain and procurement decision-makers in the UK.

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