Unsolicited invoices are unfortunately a common business strategy for some entities. Similar to a scam in many ways, however they will provide the service/product once you pay the invoice. It usually goes like this:
Traps:
Tips:
- You receive an invoice for something you didn’t ask for, or something similar but not exactly what you signed up for (and not from the same entity, but the invoice looks official). They usually get your information from a business listing/register that is available in a public space.
- The ‘would be supplier’ hopes you/or someone in the office pays the invoice without much thought as they know you were doing work in that area. (They send out thousands of these letters/faxes/emails and make a small fortune out of the businesses who don’t have the controls in place to pick it up).
- You are left out of pocket for something you didn’t really want or need but can’t get your money back as carefully worded invoices effectively become a contract once paid.
Traps:
- You don’t have the right controls in place (or they are not being used)
- Everyone is busy so they are rushing through payments
- Your accounts staff checked and it was paid last year (whoops), so they think it must be ok
- The person authorising the bill is not aware of the entire agreement and authorise add on items or incorrect invoices
- Your accounts staff are poorly trained (don’t really understand) or disengaged (don’t really care) so pay every invoice that comes in
Tips:
- If you have never had contact with the entity don’t pay
- Check every bill (sometimes people make mistakes)
- Have a operating/project budget and compare bills with expected expenses
- Have an authorisation process in place
- Make sure two signatories sign off on all payments/bank transfers. If possible these should be separate from the person who enters the bills into your accounting system.
- Ensure you are receiving regular and accurate management reports to track business performance and pick up errors quickly so they can be rectified
- Have a expert review your accounting controls to see if they are best practice for the size and complexity of your business
- Consider if your business would benefit from the ongoing support of a outsourced CFO