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P2P Fraud: The Ultimate Guide

Learn all about the types of fraud within the purchase to pay process, and how to prevent and detect it.

Fraud is on the rise.

In recent years, fraud has grown to become an ever-present risk. In fact, fraud accounts for 38% of all crime in England and Wales.

UK Finance revealed that £580 million in total was stolen via fraud in the first half of 2023 alone. Whilst this was an overall decrease of 2%, invoice and mandate fraud cases rose 5% and purchase payment fraud a massive 43%.

The Accounts Payable process is particularly fast moving with many complex moving parts, and with more suppliers and transactions than ever, finding and preventing fraud can be difficult. 

This page will help you understand and prevent procurement fraud, invoice fraud and internal fraud. 

Key benefits:

Prevent overpayment with error and duplicate detection.

Identify and prevent potential internal and external fraud

Reconcile more supplier statements more often to recover more cash

Optimise working capital by finding historical overpayments

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& testimonials.

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Table of Contents

The importance of fraud detection.

1. To keep your organisation safe from losses and other repercussions:

Fraud can have huge repercussions for a business. Financial losses can be substantial, causing anything from a slight dip in working capital to thousands, even billions. With businesses losing an average of £295,0000 to fraud, it’s easy to see how this can have a lasting impact. In worst cases, businesses have had to make job cuts, close retail stores, and even cause them to fail entirely. Large companies aren’t immune either, as was shown in 2019, when Evaldas Rimasauskas defrauded Facebook and Google out of over 100 million dollars with fake invoices from imitation email addresses. 

But the effects are felt not just financially. It can negatively impact your reputation, particularly in the case of internal fraud, which can spell trouble for the supply chain and loss of customers.

2. To comply with the law:

There are several laws that could see you receiving severe punishments if you fail to have proper control measures and reporting in place. These range from unlimited fines to imprisonment.

Fraud Act 2006 – Failure to prevent fraud offence.

Recently, we’ve seen the UK Government crackdown on their fraud legislation. The failure to prevent fraud offence sees certain businesses without ‘reasonable’ fraud procedures in place being fined, and even having sentences carried out on staff members.

Corporate Governance Code – UK SOx.

In early 2025, the Sarbanes-Oxley US legislation is due to have its counterpart in the UK. This law defines stringent Governance laws for organisations, focusing on financial disclosure requirements and internal control measures. It’s designed to crack down on fraud, give more control around audits, increase transparency, ensure accurate reporting and identify risks sooner.

Common types of fraud in Accounts Payable/P2P

Fraud in organisations can present in a myriad of ways, with many types you need to watch for:

  1. Procurement fraud.

Procurement fraud is any fraud relating to purchasing, or procuring, goods, services and project contracts, or to gain an unfair competitive advantage. This includes price fixing, bid rigging, cost mischarging, false invoices and product substitution. Public sector organisations should be extremely vigilant with procurement fraud, since contracts, goods and services are required to go to tender.

  1. Supplier/vendor fraud, and mandate fraud.

Supplier fraud involves using an organisations’ suppliers against them. Dormant suppliers could be resurrected (a phantom vendor, if you will), duplicate suppliers could be made, fake invoices could direct payments to another party, for example a shell company. The fraudsters can also intercept and change genuine invoices or change genuine supplier bank details to a different account. Posing as a supplier and changing account details is known specifically as form of mandate fraud. This type of fraud falls under the procurement fraud umbrella and can be completed by employees in conjunction with a supplier. The supplier may also be legitimate, but could be inflating pricing, under-supplying goods and more.

  1. Invoice fraud.

This very specific type of supplier fraud is designed to manipulate accounts payable. Invoice fraud means using fake or doctored invoices to fool an organisation into paying into a fraudster’s account instead of a genuine vendor.

  1. Internal, insider or employee fraud.

Internal, insider or employee fraud are fraudulent activities undertaken by members of staff or contractors within an organisation. This can take many forms, from fraudulent payments and embezzlement to false reporting and inflated expense claims.

For more information on this type of fraud and how specifically to detect it, please watch our on-demand webinar: Fraud: The Threat From Within. 

Invoice and Supplier Fraud: Red flags to watch for

Signs of invoice and supplier fraud
  • Changes in vendor bank details and/ or contact information. Alarm bells should go off if there is no reason for these changes to have been made, and if an invoice shows this differently to all the other invoices form that supplier.
  • Old vendors made active – While this can be legitimate, it could also be a sign that someone is resurrecting an old supplier for fraud purposes.
  • Duplicate suppliers – Some duplicates may not be an innocent mistake, but a way to submit false invoices from a real vendor.
  • Duplicated invoices. Suppliers that send multiple invoices may be innocent mistakes and follow ups. But others could have more insidious plans to confuse you into a duplicate payment.
  • Incorrect POs. Some PO alterations are very easy to miss, like substituting a zero or a letter ‘O’. This could be a change that makes a legitimate PO less so.
  • Invoices with inflated pricing or volumes of goods. If the pricing is rather higher than usual for the same goods, or if more goods than are usual have been added to the invoice, beware.
  • Abnormal invoice volumes from a particular supplier. Be wary of suppliers who increase their invoice volumes without warning, and without an increase in the necessity of their goods or services on your end.
  • Abnormally large invoice amounts. Unexplained price increases are a major warning sign.
  • Abnormal invoicing times. Some fraudsters operate outside of usual working hours, or operate from other countries, which can catch them out.
  • Odd-looking figures. Fraudsters can be caught out by looking at the numbers they use. If you think an invoice seems fishy, evaluate the figures. Are the same numbers or sequences appearing time and again? Do the figures often begin with high numbers? This could be a signifier of made-up values, as real figures tend to adhere to Benford’s law (where values have a higher probability of beginning with low numbers).
  • Rounded figures and even amounts despite being ex VAT. As we know, usually values before VAT being added are extremely varied. An invoice with rounded figures and even amounts is therefore unusual and possibly suspicious.
  • No itemised breakdowns on the invoice. Pay careful attention to how vague an invoice is. What exactly are the goods or services received?
  • Inconsistencies between POs and Invoices. While some POs may not quite match an invoice, of the item lines in a PO don’t match, something might be amiss. If the PO number itself also doesn’t quite match, or is entirely wrong, it’s best to double check the validity of the invoice.
  • Urgent payment requests without a valid reason. Fraudsters can try all sorts of tricks to get you to pay an invoice, including putting pressure on you to pay early or urgently.

Internal Fraud: Red flags to watch for

Signs of internal/insider fraud.
  • Staying late and working overtime, or on weekends. Fraudsters welcome the opportunity to not be overlooked.
  • Spending beyond their means. Not just luxury holidays and expensive cars. Look for large scale investments too.
  • Not taking annual leave, providing oversight or sharing workload. This makes it less likely their activities will be uncovered.
  • Over-ordering goods. This can be a sign that some goods could be siphoned off.
  • High expense claims, especially in gifts and hospitality. Some of these items may actually be for the staff member.
  • Payments just under an authorisation amount for that employee. This helps fraudsters avoid scrutiny.
  • A spike in transactions and payments that cannot be explained. This may be particularly obvious during off-peak periods where people usually wouldn’t be working.
  • A new employee, a contractor or on a short-term contract. Organised crime groups target organisations as new employees or contractors to harvest data and siphon funds.
  • Employees with personal struggles. Money troubles, including family long-term illnesses or redundancies, more children, debt or separation can make people desperate. This can provide motivation to look for a solution via fraud.

For more information on internal fraud, visit our blog:

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Fraud controls and prevention strategies

Fraud controls and prevention strategies

To combat fraud, we recommend that you create several controls within your process that enable detection. We’ve already covered all the signs of fraud that your team could be looking out for, but now we get to the how.

Leveraging technology.

For many years, finance teams relied on their own instinct and manual controls to counter fraud, and now we can leverage technology to monitor transactions and cleanse the supplier file, doing the most tedious parts for us. Automating the process ensures that you can check for a large range of fraud risk factors, fast. Although you can use 3 or 4-way matching to find some risks, we believe that also using specialised fraud tools or risk management software ensures an extremely thorough fraud detection process. This in turn aids compliance with Government regulations.

Our own software is an example of this technology.

Monitoring transactions.

Checking your transactions diligently for indicators of fraud is a best practice, particularly before you make payments. For a fast and extremely effective method, automation using forensic level tests, AI and comparisons against other data can allow you to find many, if not all, fraud threats – alongside other issues.

Maintaining and cleansing the master supplier file.

Alongside onboarding supplier checks, we recommend you monitor your suppliers regularly, and ensure your data is as clean as possible. This includes eradicating duplicate supplier data and dormant vendors from your master supplier file. A secure audit trail on your master supplier file is also important. This allows you to see when bank details have been changed and by whom, therefore enabling you to pinpoint the perpetrator of internal fraud.

Keeping a due diligence and anti-fraud culture

With any organisation, fraud protection relies on people to be successful. It means creating a due diligence culture – making sure that you perform thorough checks and investigations for all staff in your organisation, but also every partner you work with. And, it means ensuring an anti-fraud culture – ensuring your team always conform to fraud protection measures and policy as habit.

Due diligence practices:

  • Actively search for fraud indicators
  • Vet staff carefully and enhance your procedure for positions that are higher risk.
  • Carry out supplier fraud due diligence regularly.
  • Identity checking of suppliers and potential staff.

To understand more about these measures, read our blog on the subject.

Anti-fraud measures:

  • Mandatory fraud training for all staff, including on whistleblowing.
  • Promote accountability by making anti-fraud duties a key part of job roles.
  • Creating a set of fraud principles to define what to do when faced with potential fraud
  • Policy that encompasses the whole organisation, from the top down.

For further information on creating an anti-fraud culture, read our blog.

About FISCAL’s fraud detection software

Fraud can sometimes be incredibly difficult to detect, not to mention time-consuming if you would like to check every transaction and every supplier. There simply isn’t enough time to check them manually, so our solution is to do that work for you.

Our software makes it quick and easy, and we make sure every risk is addressed. It completes a set of forensic-level tests, and is aided by AI to search for fraud risks in your data, from odd-looking transactions, to duplicate suppliers, to identifying matching employee bank details to suppliers, and much more.

You’ll see a list of risks we’ve found and be able to investigate them. Importantly, this is completed as soon as the entry is in your ERP, and therefore it can all be done before payment run, thereby preventing those payments from ever leaving your organisation.

Laptop showing our transactional risk management software and it's capabilities to find risks including duplicate payments and fraud, to enable working capital optimisation

Testimonials & Case Studies

De La Rue: Case Study

De La Rue were looking for a solution that made their payments process watertight and protected against fraud.

Managing Fraud Risk - Webinar

Join Nandini Balakumar and FISCAL for this CPD-accredited webinar – an informative look at how to manage fraud risk within your organisation.

How to Strengthen your Fraud Defences- Webinar

In this webinar, fraud expert Robert Brooker and FISCAL CEO, David Griffiths share advice on proactive techniques that Finance leaders can use to detect and prevent fraud. 

Fraud: The Threat From Within - Webinar

This webinar discusses what leads an employee to commit fraud, what the current insider threats and trends are, and what the future holds and why.

Want to know more about FISCAL Technologies?

We’d love to show you our solutions in action!