Businesses can’t grow without getting paid, and businesses won’t get paid without an invoice.

But fraudsters have taken notice, capitalizing on the fact that the invoice, whether it’s digital or paper, represents one of a company’s most attractive attack surfaces.

Against this backdrop, invoice fraud is a rapidly growing threat, with cybercriminals and internal fraudsters increasingly finding ways to manipulate the payment process for illicit gain.

Invoice and vendor fraud can take many forms, from fake invoices sent by external cybercriminals to fraudulent activities carried out by employees with access to internal systems.

And as the contemporary threat landscape digitizes, with businesses becoming more reliant on digital transactions, the risk continues to rise, especially for companies with outdated systems or weak internal controls.

Cybercriminals have become adept at exploiting weaknesses in digital payment systems. Invoice fraud often starts with a phishing attack or a compromised email account. In these cases, attackers will intercept or spoof communications between businesses, posing as a legitimate vendor or supplier. They then send altered invoices or payment instructions, redirecting funds to fraudulent accounts.

For many B2B companies, these vulnerabilities have become a significant source of financial and operational risk.

Read more: Why Business Email Compromise Scams Target Valuable B2B Relationships

Outdated Systems and Weak Internal Controls: A Recipe for Disaster

The PYMNTS Intelligence report “Automating Accounts Payable for Cost Savings” found that 34% of businesses process more than 5,000 invoices per month. At the same time, separate PYMNTS Intelligence in the report “Getting Paid: Digital Payments for Improving Cash Flow and Customer Experience” found that 75% of companies still use paper checks.

Those two statistics underscore a growing gap in the payments industry: the disconnect between accounts payable (AP) workflows and payments, which can leave businesses vulnerable to inefficiencies and fraud.

That’s because manual and paper-based processes expose companies to risks such as invoice duplication, payment fraud and vendor impersonation. Paper-based systems also make it difficult to implement stringent security controls, while fragmented tech stacks may not offer effective safeguards.

Fraudsters “will call your back-office staff who are not trained in payments fraud prevention and try to communicate false information over the phone. And these staffers, they are great, smart, hardworking people, but they do not have the tools and that is why the fraudsters are attacking them,” Ernest Rolfson, founder and CEO of Finexio, told PYMNTS in an interview posted in July.

“Fraud is the biggest and most important thing we hear from customers today in B2B payments … They want more automation, as much as possible, and they want no fraud,” Rolfson added.

Read also: Unlocking the 3 Biggest Benefits of Automating Accounts Payable

Strategies for Prevention and Risk Mitigation

Data shows the average enterprise receives half of its invoices on paper, with nearly four in 10 (38%) of payments being made manually. Against this backdrop, over a third of firms (36%) cite automating their AP function as a key priority.

Companies that rely on manual processes and systems that are prone to human error and offer limited visibility into transactions can find that they’ve inadvertently made it easier for both external and internal fraudsters to exploit them.

“The inflexibility of traditional systems and platforms have prevented lots of companies from moving forward and keeping up,” Boost Payment Solutions Chief Operating Officer Illya Shell told PYMNTS.

Many businesses, especially small- to medium-sized businesses, also operate with limited financial oversight, allowing fraudulent invoices to slip through the cracks.

But advances in digital payments technology, including automated invoicing and payment platforms with built-in fraud detection capabilities, can help reduce the risk of human error and flag suspicious transactions in real time. These systems offer greater visibility into the payment process and can quickly identify anomalies, such as changes to bank account details or unusual payment requests.

Ultimately, the human layer of defense, as emphasized by many of the risk management leaders PYMNTS has spoken to, is increasingly critical in shrinking enterprise attack surfaces — making individual education around best practices crucial for a company’s own employees.

Developing strong relationships with trusted vendors and suppliers can also help reduce the risk of fraudulent invoices. Businesses should verify vendor details before making payments and regularly review supplier contracts to ensure that services are being rendered as agreed.

Looking ahead, as businesses invest in advanced technologies, strengthen internal policies and educate their employees on fraud risks, the future intersection of both payments automation and fraud prevention looks bright.

“There are a lot of changes happening across a lot of outdated or antiquated industries. We’re in a good space right now to see a lot of change,” Priority Head of Commercial Court Toomey told PYMNTS. “It’s ironic that one of the areas for most companies that is the most outdated are their financial tools, when just a small investment from that same team can go a long way in improving efficiency and also cost savings.”