What is an invoice?
- An invoice is a document that keeps a record of a sale.
- It lists vital information about a transaction such as date of purchase, mode of payment, and items purchased.
- Fraudsters have devised ways to get money out of companies through invoice fraud, so beware.
When you purchase an item in a store, the seller will give you a piece of paper as proof of the receipt of your payment—which is more formally called an ”invoice.” An invoice is a commercial document that lists the transaction between the seller and the buyer.
Information found on the invoice
The invoice should clearly state the following information:
- Amount due – it is essential to display the exact amount of the purchase, and any confusion leads to delays.
- Date of the invoice – the time is crucial because it gives a timestamp for when the goods were officially sold or paid.
- Payment due date – this marks the period of the latest possible time that the customer must pay.
- Description of the goods and service – all of the items purchased shall be on this list.
- Customer’s information – the invoice has to contain information such as the customer’s name, contact number, and address.
Importance of an invoice
At its most basic form, an invoice is used to keep a record of a sale. It tracks the date of the purchase, the payment, and holds a record of the buyer’s debt if any. A business can also trace its employee’s sales through invoices. Also, providing an invoice for every purchase is a legal responsibility in most countries including the U.S. It is a vendor’s responsibility to pay their taxes truthfully, and they can only do so if they give out correct invoices. It also really helps if you ask for a receipt everytime you are purchasing because it leaves a mark on their sales record. If the buyer’s invoice got lost, the seller has the responsibility to provide a copy.
What is invoice fraud?
Invoice fraud schemes can be incredibly simple: Fraudsters who act as a legitimate seller send an incorrect, more expensive or fake invoice to an unsuspecting company in an attempt to extract money.
Here’s an example of a recent case:
An incident in Australia involving a well-known bank in a multi-million dollar invoice fraud was found to have corrupt employees doing the illegal activity from inside the company. These corrupt employees would authorize the payments of invoices for a legitimate contractor but with amounts higher than the agreed value.
How to prevent invoice fraud
One of the best ways to avoid invoice fraud is to validate the legitimacy of invoices that you receive by cross-checking it with your orders and the goods that you received. Double-checking the information such as the date, email address, bank details and contact information will help prove the legitimacy of the invoice received. Also, check if the supplier listed in the document is a real business establishment.
If you found any suspicious activities by the invoice sender, go ahead and run it by your financial advisor or call the U.S. anti-fraud hotline. Even if the amount is low, it is essential to make a report because they may be operating on a larger scale.