When unscrupulous businesses feel the pinch, it is not unusual for them to resort to under-hand methods in order to increase their bottom line, according to Moira Hindson, head of the forensic accounting team at top twenty accountancy firm, Kingston Smith LLP.  Over-charging trusting clients is a simple way for them to do this and often goes undetected.

Moira Hindson is urging businesses to look out for the following five warning signs which are often linked to supplier over-charging.

• A string of invoices in close numerical sequence;
• Invoices for round-sum amounts;
• Invoices that are always exactly equal to a previously estimated figure;
• Invoices received from employees, or relatives of employees, acting as external suppliers;
• Unusual patterns in amounts or timing of invoices.

According to Moira Hindson, “In business, trust is all very well but should always be supported by sensible checks. Since many supplier scams require some degree of collusion, setting up a process to encourage whistle blowing can be helpful. However, this is no substitute for the application of an imaginative and creative system for identifying and testing suspicious transactions.”

Moira has witnessed a steady stream of cases in which businesses have regularly been over-charged by suppliers. She has acted in an expert capacity in situations ranging from the manipulation of time sheets in order to increase fees to the re-charging of third party expenses at grossly inflated costs - in direct contravention of the contractual agreement. She has also seen companies charge in excess of project estimate costs, even when the costs were lower than the estimate.

In one case, such misconduct had been taking place for over ten years, with the over-charged company’s management having no inkling that anything was amiss. In fact, they believed that their internal control procedures over purchases and supplies, which covered all the standard tests, were more than adequate to pick up errors and omissions on the part of suppliers.

Moira concludes, “The recent stream of headlines telling us we could be paying too much for goods and services including water, downloads from the internet, payment protection insurance, replica football kits and bank charges are particularly galling. As consumers we have little alternative but to rely on industry regulators to check that the prices we are asked to pay are fair and that our bills are calculated correctly. When it comes to being over-charged in business, we have much more control and need to be vigilant.

“There is no reason why, for example, rechargeable expenses incurred by a supplier should not be subjected to exactly the same scrutiny as those incurred by an entity’s own employees. We are facing tough economic times and it is time to toughen up our processes to ensure that we are not being over-charged from any supplier.”