Warning: Be aware of mandate fraud

Businesses are being urged to alert staff to the dangers of mandate fraud, after new figures show that losses more than doubled in the last year to reach £77 million.

Mandate fraud is when you or a person are deceived into changing a direct debit, standing order or bank transfer mandate, by purporting to be an organisation you make regular payments to, for example a subscription or membership organisation or your business supplier. 

Often the scam will only come to light when the real supplier chases for payment. In some cases, this can be many months after the first transfer of money.

Data from Action Fraud shows that, in 2017-18, businesses submitted over 3,451 reports about mandate fraud, a rise of 123 per cent over the previous year’s figure of 1,551.

The average loss to each business in 2017-18 was £22,500, an 8 per cent increase on the previous year.

Commenting, a spokesperson says: “The doubling of losses from mandate fraud over the last year should be a cause for concern for all businesses.

“Far too many businesses are falling victim to mandate fraud. In some cases, the losses are relatively small, in others they can run into hundreds of thousands of pounds, potentially putting the future viability of the business at risk.

“Businesses must ensure their accounts staff are trained to recognise the hallmarks of a mandate fraud attempt. With the right training and controls in place, there’s no reason why these frauds should be successful.”

Effective management accounts and company audits

When putting processes in place for effective business administration, sound management accounts will enable better control of your financial situation and awareness of the business in real time. This can be effective not only in detecting and countering fraud, but also in enhancing planning for the peaks and troughs. In turn, whilst many companies do not need an audit due to rising thresholds, an audit can give comfort to business owners and act as a fraud deterrent.

At Beavis Morgan, we work with SMEs to put processes in place which make it easier to run your business, reduce risk and maintain effective management of your company’s working capital.

Contact Steve Govey or your usual Beavis Morgan Partner for further information about how we can assist you and your business.