False Billing - Accounting Fraud

What is false billing?

The issue of false billing happens to be a common thing that individuals as well as companies have to
deal with. It basically involves sending out professional looking invoices for products or services that
were not ordered or received. False billing is usually done with the hope that payments will be made
without investigation. This is a very common practice especially within large corporations as these are
the ones that have many transactions on a daily basis. Individuals are more likely to investigate and
query a particular invoice which is why those involved in this method of fraud tend to target large and
busy companies.

Companies with big billing systems are usually prone to false billing. This is because they want to do
away with the nagging creditors and resume their day to day operations with a peace of mind. As they
receive their day to day bills and invoices, the fraudsters slide in their professionally designed invoice
and hope that the company will release the payment. Most fraudsters have been known to get away
with this scam with some receiving monthly payments as the company believes that they are constantly
in business with the company.

How false billing is done

In order to be successful at coming up with a convincing invoice demanding payment, you really need
to be aware of the person or company that you’re sending the invoice to. You need to know the goods
and services that they frequently use so that they don’t raise any questions when they see the falsified
invoice. The fraudsters will have some background information regarding your shopping before they
can send out the invoice. The same applies to companies. The case of companies is however different as
some are known to be inside jobs whereby accountants collude with outsiders to send falsified invoices
which they will approve for release of payment and they can thereafter split the returns.

How is falsified billing detected?

The realization of this fraudulent transaction has made companies to be alert as to the payouts that
they make. This therefore means that the company will create a legitimate list of the services that they
have hired and products that they expect to receive. These are the only products and services that
will be paid. Any other billing that they receive can easily be ignored if it is not present in their already created list. The basic idea is to create a purchase order numbering system and payouts are only made to corresponding purchase orders.

Consequences of falsified billing

There are a number of severe consequences for conspirators in falsified billing as it lies under the laws
of fraud. The consequences involve jail time, payment of hefty fines or a combination of both in some
severe cases. Companies as well as individuals are urged to report any falsified bills that they receive
so that they can be traced and those responsible be brought to justice. There are also a number of
consumer protection agencies that have been at the forefront of fighting this vice by advocating for very
severe penalties to those found guilty.

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