How closely do you look at who you do business with? If the answer is “not very,” you might be putting your business at risk.

According to the 2019-2020 Kraft Global Fraud and Risk Report, 28% of U.S. organizations were significantly affected by external fraud within the last year. And, of that number, 36% of fraud perpetrators were contractors or third parties, like vendors.

As businesses become more global and the networks of suppliers and vendors increase, stopping vendor fraud is becoming a serious priority. In fact, 69% of U.S. respondents in the Kraft Report labeled external fraud as a significant or high priority at their company.

The best way to prevent vendor fraud is to establish a list of fraud-prevention protocols, such as:

• Whenever possible, the best first step is to pick up the phone and call your trusted contact at the vendor.
  
• Create a process to verify vendors’ validity.
• Monitor vendors’ invoice and payment patterns so you can easily identify irregularities.
• Use a software program that helps spot duplicate or prohibited vendors and identifies supplier/employee collusion.
• Establish an anonymous system for employees to flag suspicious activity.
• Continuously promote your anti-fraud position to deter employees and vendors from attempting it.

If you’re looking for more ways to protect your business against fraud, click here.