Media releasePublished on 08 November 2021

Nearly one in five Australian small businesses a victim of invoice fraud

New Xero survey reveals the average cost of invoice fraud to small businesses of all sizes

Melbourne — 8 November 2021 — A new survey by Xero, the global small business platform, has uncovered the prevalence of invoice fraud in Australia amongst small businesses, with one in five (18%) respondents having fallen victim to scammers, falsely paying out a huge $15,500 on average.

The survey of more than 1,000 Australian small businesses, released to coincide with the ACCC’s Scams Awareness Week, looked at experiences with invoice fraud and investment in cyber security. The survey also revealed behaviours and attitudes towards invoice management and understanding of e-invoicing.

Invoice fraud, also known as false billing, involves targeted attacks (like phishing, hacking or ransomware) by cyber criminals to fraudulently request payment from businesses. For example, a business may fall victim to a phishing scam where they receive a bill from an email address which looks to be from a supplier but has been intercepted and payment details have been changed. False billing scams request businesses to pay fake invoices for services or goods that they did not order.

The survey found that more than one in five (22%) respondents know of another small business that has encountered cyber criminals sharing fraudulent invoices, with one in 10 (11%) saying their peers were targeted within the past year.

The research also showed small business respondents with five to 19 employees (19%) are more likely than micro businesses with two to four employees (10%) and sole traders (3%) to have been victims of invoice fraud in the past year. Of those respondents who had fallen victim to fraudulent invoices, larger small businesses lost the most with false billing costing the respondents $25,370 on average, while micro businesses lost an average of $16,160.

“This new data paints a concerning picture of the levels of invoice fraud in Australia, with small businesses of all sizes being targeted. For anyone falling victim, these scams are having a big financial impact,” said Joseph Lyons, Managing Director, Xero Australia & Asia.

Evaluating small business vigilance online

Almost nine in 10 (87%) small businesses say cyber security is important, but nearly three in 10 (28%) businesses don’t spend any money on protection and education for their business.

When asked if they could identify a fraudulent invoice, only two in five (42%) small business respondents were confident in spotting one. Three in 10 (29%) respondents didn’t know how to spot a fraudulent invoice or were unsure if they would know how. Small businesses in the start-up phase are at the greatest risk, with under one-third (31%) respondents able to identify a fraudulent invoice.

E-invoicing a more secure way to invoice

E-invoicing, a relatively new tool in Australia, is helping to reduce the risk of interception and invoice fraud, providing a more secure invoicing network with no email intervention.

“E-invoicing allows businesses to electronically exchange invoices directly between accounting software systems via the secure Peppol network, so it doesn’t rely on email. This process can offer peace of mind that an invoice you are receiving is from a trusted supplier,” added Lyons.

The research revealed the majority (78%) of respondents can see clear benefits to adopting e-invoicing, with one in four (26%) noting its ability to minimise the risk of fraud. Despite this, only 8,000 Australian businesses have registered for e-invoicing.

“As we continue on a path to economic recovery, it’s important businesses have the right measures in place to protect and enhance their financial wellbeing. Emerging tools like e-invoicing have the potential to create a safer and more effective way to manage invoices and bills, now and into the future. Small business owners should get in touch with their advisor if they want to learn more,” concluded Lyons.

ENDS

Media Contact

Jessica Brophy | +61 431 268 549 | jess.brophy@xero.com

About e-invoicing

Electronic invoicing, or e-invoicing for short, is the automatic exchange of invoices between accounting software. Unlike emailing a PDF or online invoice, an e-invoice is sent directly to the accounting software of another business or government department almost instantly – via a secure e-invoicing network. E-Invoices can be sent between accounting software as long as both are connected to the same e-invoicing network, even if the buyer and supplier are using different accounting software. For example, e-invoices can be exchanged between Xero and non-Xero software.

About Xero’s e-invoicing survey

The survey was commissioned by Xero Australia and undertaken by Lonergan Research to analyse small businesses’ attitudes and behaviours around invoicing, as well as their level of understanding on e-invoicing and appetite for adoption. In September 2021, Lonergan Research conducted an online quantitative survey, interviewing 1,021 small businesses with fewer than 20 employees. The Australian survey is nationally representative.

About Xero

Xero is a cloud-based accounting software platform for small businesses with over 2.7 million subscribers globally. Through Xero, small business owners and their advisors have access to real-time financial data any time, anywhere and on any device. Xero offers an ecosystem of over 1,000 third-party apps and 300 plus connections to banks and other financial partners. In 2020 and 2021, Xero was included in the Bloomberg Gender-Equality Index and in 2020, Xero was recognised by IDC MarketScape as a leader in its worldwide SaaS and cloud-enabled small business finance and accounting applications vendor assessment.

For all media enquiries, please contact the Xero media team.

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