How to protect your business from invoice fraud in 5 easy steps

It's Tuesday morning. Your accounts payable team is processing invoices when one catches their eye. It's from your regular office supplies vendor: same logo, same format, same contact details. The only difference? The bank account number at the bottom has changed.

"Must be a new account," your team member thinks, and approves the €12,000 payment.

Three days later, your actual vendor calls. They haven't received payment and they're threatening to cut off service. That's when you realize: the invoice was fake, the bank account belonged to a fraudster, and your €12,000 is gone. Worse? Your real vendor still expects to be paid, meaning you're out €24,000 total.

Welcome to invoice fraud. It's not dramatic. It's not high-tech. It's just a fake invoice that looks real enough to fool your team into sending money to the wrong place.

The good news? Invoice fraud is preventable. This article will show you how fraudsters manipulate invoices, how to spot the warning signs, and how to build a verification system that catches fake invoices before they cost you thousands.

Let's make sure every euro you send goes to the right place.

Invoice fraud happens when a scammer sends you a fake invoice (or alters a real one) to trick you into paying them instead of your legitimate vendor.

Fraudsters don't need to hack your systems. They just need to create a convincing invoice and hope your team is too busy to double-check the details.

Why it's so common:

It exploits routine. Your team processes dozens of invoices every month. When you're moving fast, a fake invoice that looks 95% legitimate can slip through unnoticed.

It's easy to execute. All a fraudster needs is your vendor's logo (easily found online), basic invoice software, and a bit of research about your company. They can create a convincing fake invoice in under an hour.

The payoff is immediate. Send the fake invoice, receive the payment, disappear. By the time you realize what happened, the money is long gone.

The numbers are staggering. According to the Association of Certified Fraud Examiners, the median loss from a single invoice fraud incident is $100,000 (approximately €92,000). That's enough to cover three months of payroll for a 10-person team, or a full year of office rent.

If you're processing invoices, you're a target. The question isn't whether fraudsters will try, it's whether your defenses are strong enough to stop them.

Three tactics account for the vast majority of successful attacks and the biggest financial losses. Here's what you're up against:

What it looks like: You receive an invoice from a regular vendor. Everything looks correct: the logo, the invoice number, the amount, the services. But buried in the payment details, the bank account number has changed.

How it works: Fraudsters monitor your email communications (often through compromised accounts or phishing attacks) to learn which vendors you work with. They send you a fake invoice that's nearly identical to the real one, except the bank details point to an account they control.

Sometimes they'll send a separate "update" email first: "We've changed banks. Please update our payment details." This primes you to accept the change without question.

Real-world example: Google fell victim to a sophisticated invoice fraud scheme that cost them over $100 million between 2013 and 2015. A Lithuanian fraudster created a fake company impersonating Quanta Computer, a legitimate hardware supplier. The fraudster sent fake invoices that looked identical to Quanta's real ones, complete with authentic-looking contracts. Google's accounts payable team processed the payments without additional verification because the invoices appeared legitimate.

If a company with Google's resources can fall victim, any business can. The difference is having the right defenses in place.

Your defense:

• Never accept bank account changes via email alone
• Call the vendor using a phone number you already have on file (not one provided in the email)
• Require at least two people to confirm any bank detail changes
• Use Verification of Payee technology that checks if the account name matches the bank details

What it looks like: An invoice arrives from a company you don't recognize, but the services seem plausible: "IT consulting," "office maintenance," or "legal advisory services."

How it works: Fraudsters create fictional companies with professional-looking invoices, websites, and email addresses. They research your business to understand what services you might need, then send invoices hoping someone will assume a colleague ordered the service.

Real-world example: Amazon lost $9.4 million between 2020 and 2022 when an Operations Manager at their Georgia warehouse created fake vendors and submitted fraudulent invoices. The manager provided fake vendor information to unknowing subordinates and asked them to input it into Amazon's vendor system. Once the fake vendors were approved, she submitted fictitious invoices claiming the vendors had provided goods and services to Amazon. Because she had approval authority, she could authorize the payments herself. The fraud only came to light during a routine audit two years later.

Your defense:

• Implement a "no purchase order, no payment" policy
• Verify new companies exist (check business registration, VAT number, website)
• Match every invoice to an approved purchase order or contract
• Call the person who supposedly ordered the service to confirm

What it looks like: An invoice arrives marked "FINAL NOTICE," "PAYMENT OVERDUE," or "URGENT: Service Interruption Imminent." The tone is aggressive, threatening legal action or service suspension.

How it works: Fraudsters create panic to bypass your verification processes. When people feel rushed or threatened, they make mistakes. The "urgent" invoice might be for a service you actually use (web hosting, software, utilities), making it seem credible.

Real-world example: A small architecture firm received an email claiming their cloud storage was overdue and would be suspended within 24 hours unless they paid €2,400 immediately. The invoice looked legitimate and included the firm's actual account number (found through a previous data breach). Panicked about losing access to project files, the office manager paid immediately. The firm's actual provider had no record of any overdue payment.

Your defense:

• Be immediately suspicious of invoices marked "urgent" or "overdue," especially if it's the first you've heard of it
• Never let urgency override your verification process
• Check your records for payment history with this vendor
• Call the vendor using contact details you already have (not the phone number on the urgent invoice)

Now that you know the tactics fraudsters use, let's talk about how to spot them before they cost you money.

Think of these as your team's fraud radar. No single red flag guarantees an invoice is fake, but when you spot two or more together, stop and verify before you pay.

Fraudsters copy your vendor's invoice down to the last detail, except for one tiny change that sends your money to them.

Watch for:

• Company name variations: "Smith & Co Ltd" vs "Smith and Co Ltd"
• Slightly different addresses or email domains
• Bank account numbers that don't match previous invoices
• Phone numbers that are one digit off

How to catch it: Compare every invoice against the previous one. Keep a master file of verified vendor details and check new invoices against it.

If you receive an invoice you weren't expecting, stop and verify.

Watch for:

• Bills for services with no matching purchase order
• Timing that feels off (too early, too late, or unexpected renewal)
• Services that don't quite fit your business

How to catch it: Match every invoice to an approved purchase order. If no record exists, contact the person who supposedly ordered the service.

Legitimate invoices usually reflect actual costs: €1,247.83, not €1,250.00. Fraudsters use round numbers because they're easier to create.

Flag invoices for exactly €1,000, €5,000, or €10,000 for extra verification. Check that the amount matches the agreed price or previous billing pattern.

Fraudsters often make small mistakes that legitimate vendors wouldn't.

Watch for:

• Blurry logos, typos, or inconsistent fonts
• Unprofessional email addresses (Gmail instead of company domain)
• Design that doesn't match previous invoices

How to catch it: Compare the invoice design to previous ones. Check the email domain matches their website. Trust your gut: if something looks off, it probably is.

You know your vendors and how they communicate. If an invoice doesn't match that relationship, pay attention.

Watch for:

• Communication style that feels wrong
• Requests that don't fit (sudden payment method changes, different payment terms)
• Threats that don't match your history with them

How to catch it: Trust your relationship knowledge. Call using a phone number you already have on file.

Legitimate vendors rarely create panic. Fraudsters always do.

Watch for:

• "URGENT," "FINAL NOTICE," "IMMEDIATE PAYMENT REQUIRED"
• Threats of service suspension or legal action
• Deadlines that give you no time to verify

How to catch it: When you see urgency, slow down, don't speed up. Verify through a separate channel before paying.

Knowing the warning signs is half the battle. The other half? Building a system that makes fraud nearly impossible, even when your team is busy or distracted.

The best defense is a systematic process that requires multiple checks before money leaves your account. Here are the essentials:

Never let a single person approve and send a payment without oversight. This principle, known as separation of duties, is a fundamental internal control mechanism designed to prevent both external fraud and internal embezzlement.

Set clear thresholds:

• Payments under €500: Single approver (with verification) ✔️
• Payments €500 to €5,000: Two approvers required ✔️✔️
• Payments over €5,000: Two approvers plus executive sign-off ✅✔️✔️

Separate the roles: The person who verifies shouldn't be the same person who approves.

Before approving any invoice, verify:

• ☐ Does this match an approved purchase order?
• ☐ Is this vendor in our approved database?
• ☐ Do company details exactly match our records?
• ☐ Does the amount match the agreed price?
• ☐ Have we received the goods or services?
• ☐ Are there any warning signs present?

For a more comprehensive approach, consider implementing accounts payable internal controls that cover the entire payment lifecycle.

If bank details have changed, you're paying a new vendor, or any warning signs are present, verify through a completely separate channel.

Do: Call using a phone number you already have saved, or message on a platform where you already communicate.

Don't: Reply to the email asking "Is this real?" The fraudster will simply reply "Yes!"

Create an audit trail for every payment: who verified it, what steps were taken, who approved it, when payment was sent.

Any request to change vendor payment details should trigger your highest level of scrutiny:

• Stop all payments until the change is verified
• Verify through multiple channels with multiple people
• Test with a small payment first before processing large invoices

Your financial platform should be an active partner in your defense. Three features are non-negotiable: Verification of Payee, dual authorization, and real-time alerts. Here's what to look for:

Verification of Payee (VoP)

Automatically checks whether the name on an invoice matches the name registered to the bank account. If there's a mismatch, the system alerts you before the payment goes through.

Real-time transaction alerts

Instant notifications for every transaction. The faster you catch fraud, the better your chances of stopping it or recovering funds.

Granular permission controls

Set specific spending limits and approval requirements for each team member. If credentials are compromised, granular permissions limit the damage.

Comprehensive audit trails

A complete record of every action: who did what, when, and from where. Essential for detection, investigation, and accountability.

Strong authentication

Multi-factor authentication ensures only authorized people can access your account, even if passwords are compromised.

You now have everything you need to protect your business from invoice fraud. Here's what’s crucial to keep in mind:

1. Remember the three most dangerous tactics
2. Stay vigilant against he six warning signs
3. Start building a fraud-proof payment process
4. Leverage tech features that will catch what humans miss

Start by implementing the verification checklist and dual authorization. These two changes alone will stop the majority of invoice fraud attempts. Then layer in technology for complete protection.

Together, these layers make your business nearly impossible to defraud.

Fraudsters look for easy targets: businesses that process invoices quickly without verification, that rely on single approvers, that don't use technology to catch mistakes. By implementing what you've learned, you're no longer an easy target.

At Qonto, we've built a business account with every security feature covered in this article. Verification of Payee catches fraudulent bank details before you pay. Real-time alerts notify you the moment money moves. Granular permissions and dual authorization prevent unauthorized payments. Comprehensive audit trails give you complete visibility.

These features give you the confidence to focus on growing your business instead of worrying about fraud.

Ready to see how it works? Explore Qonto's security features or open an account in 10 minutes.