How to Perform E-Invoice Validation: Tips to Avoid Fraud

Failing to conduct e-invoice validation can expose businesses to fraud, resulting in significant financial losses and reputational damage. With the increasing adoption of e-invoicing in Saudi Arabia, fraudsters are using more sophisticated tactics, such as imitating suppliers and demanding payments for fake invoices.

But what is e-invoice fraud, and what are its forms? How can your business implement an effective e-invoice validation strategy to protect itself? Find the answers in this guide by EZ Integrated.

The Importance of E-Invoice Validation

E-invoice fraud typically involves sending counterfeit invoices that mimic the requirements of legitimate electronic invoices. These invoices may request payment for goods not purchased or overcharge for previous purchases.

Businesses in all sectors are at risk, but those with high transaction volumes—such as corporations and commercial entities—face greater threats.

Falling victim to fraud has long-term repercussions, including a loss of trust from clients and partners who may avoid future transactions with the affected business.

Three Scenarios Requiring E-Invoice Validation

To build a robust e-invoice validation framework, identify key scenarios where additional verification is essential. These scenarios include:

1. Duplicate E-Invoices

This involves submitting a bulk of paperwork along with an electronic invoice to claim amounts exceeding the actual value of goods or services.

Such fraud often occurs in accounts payable departments where e-invoice validation is neglected. In other cases, an employee may review the invoice but fail to notice it is counterfeit due to the presence of an original invoice.

To mitigate this risk, implement strong controls to track invoice information and leverage technology for invoice auditing.

2. Fake Invoices

In this type of fraud, scammers charge businesses for goods or services that were never delivered. They create invoices under seemingly legitimate business names with detailed descriptions to convince victims to pay.

This form of fraud is especially dangerous for businesses heavily reliant on suppliers, particularly small and medium enterprises that may lack the resources to validate all invoices.

To avoid this, establish secure communication channels with suppliers and set up mutual security measures. Fraudsters may also alter genuine invoices by changing payment details to steal large sums before detection.

3. Phishing Scams

Instead of providing invoices, fraudsters impersonate suppliers or clients through emails, urging recipients to pay via links that install malware or steal sensitive information.

These scams rely on social engineering, making them highly effective. Businesses can mitigate the risk by training employees through awareness programs and implementing security measures like email authentication systems.

Five Ways to Ensure E-Invoice Validation

Now that you know the most common and dangerous types of e-invoice fraud, here are five effective ways to validate invoices and avoid fraud:

1. Conduct Comprehensive E-Invoice Validation

A solid e-invoice validation framework is your first line of defense. Auditing every invoice line by line helps detect fraud and identify errors that could lead to significant financial losses.

2. Leverage Digital Tools to Detect Invoice Fraud

Technology offers tools that can track invoices and automatically flag discrepancies, adding an extra layer of protection against e-invoice fraud.

For example, ZATCA’s QR code scanner can validate e-invoice QR codes and verify their authenticity.

3. Provide Ongoing Employee Training

As fraud tactics evolve, so should your security measures. Regular training sessions and workshops equip employees to identify new fraud trends and validate invoices efficiently.

4. Prioritize Data and Information Security

To prevent ransomware attacks or data breaches, adopt strict security measures, including data encryption and regular backups, to safeguard financial data.

5. Establish Multi-Level Approval Processes

A hierarchical system for reviewing and approving invoices increases accountability and adds hurdles for fraudsters attempting to bypass financial safeguards.

How EZ Integrated Can Help You with E-Invoice Validation

At EZ Integrated, we offer comprehensive e-invoicing solutions to ensure secure integration with the FATOORA portal, effectively protecting businesses from e-invoice fraud.

Our solutions enable your business to match invoices with purchase orders, identify unusual activities, and manage user permissions to prevent unauthorized transactions.

Additionally, we provide detailed reports to analyze spending patterns and review expenses. With our technical support and expertise, your business can achieve full compliance with ZATCA regulations and enhance the security of its financial processes.