The Silent Profit Killer: Fake Invoices

But here’s the truth: one of the simplest and most common ways businesses lose money is through fake invoices. They look routine. They look legitimate. And that’s exactly why they slip through.

A Tale of $70K … gone forever

One of the smartest and most conscientious people I know recently got duped on a fake invoice. The invoice from a software vendor for a critical project came in urgently, saying they would stop all work unless the invoice was paid immediately.

My friend knew the project implementation timeline was extremely time-sensitive, so he paid the invoice without a thought—got to keep the work flowing, after all. 

Only later, when a real invoice came in, did he realize he’d been scammed

Why Even Smart Owners Get Duped

Running a business means you and your team are moving fast. Bills come in, payments go out, and in the middle of the chaos, a scammer sneaks in an invoice that looks just close enough to the real thing. 

And, frankly, if you’re not close to your financials, you may not even know something’s amiss. You might assume someone on the team requested it, or – if you don’t approve your own bills to be paid – someone on the team might assume it was you and not bother to ask.  

Red Flags to Watch For

Random sender: That “vendor” email came from a Gmail account, not a company domain.

Unfamiliar purchase: You don’t recognize the charge, but it feels small enough to approve without asking questions.

Fake support number: The invoice lists a phone number you can “call.” Except it goes straight to the scammer.

The Real Cost

Here’s the kicker: it’s not just the amount of the invoice. Fraudulent payments are a direct hit to your bottom line. It’s money going out that wasn’t supposed to. 

They also are a big red flag for weak internal controls, which auditors, lenders, or even potential buyers will notice. 

How to Protect Your Business

The good news? Fake invoice payments are preventable. A few smart systems go a long way:

1. Segregate duties. The person entering bills shouldn’t be the same person approving payments. And whoever approves payments must have line of sight into the budget and expenses so they know if it’s real or not. 
2. Standardize vendors. Only pay from pre-approved vendors with signed contracts. (While you’re at it, don’t pay vendors till you get a W-9, if needed, so you don’t have to chase them for it later.) 
3. Spot-check monthly. Take 15 minutes to personally review your payables report. Fresh eyes catch things your team might miss, even if you have someone else approving payments. 
4. Automate approvals. Use accounting software or workflows to flag anything that doesn’t match vendor records. (We are an accounting partner for Bill.com and we set up a great workflow that includes approvals and matching to QuickBooks Online.)

The Bottom Line

Fake invoices are silent profit killers. There’s no good reason to lose your hard-earned money to scammers, and it’s easy to implement systems to spot-check for fraud. 

Want to know if your books are protecting you—or leaving you exposed? Take our free Financial Fitness Checkup today.