The period leading up to the holidays, often called the ‘silly season’, brings a surge in business activity, but also a sharp rise in sophisticated fraud. Many entrepreneurs receive Purchase Orders (POs) hoping to secure a strong finish to the year, but some of these are fake Purchase Order scams.
Whether you’re new to the procurement space or you’ve been in the industry for years, scammers are still active and constantly adjusting to the measures set in place to identify a fake PO. This fraud is devastating because the SMME must first pay their own supplier to fulfil the order, only to later discover that the Department or End-user who issued the fraudulent Purchase Order has no intention of making payment. This leaves the contractor burdened with significant debt and unusable stock, and in some cases, the so-called “suppliers” are complicit in the scam, resulting in no stock being delivered at all.
As you manage your final contracts and prepare for the new year, here is a quick guide to help you protect your working capital by spotting the clear warning signs of a fraudulent Purchase Order.
Five Obvious Indicators of a Fake Purchase Order
Scammers are often rushing, which means their fake documents usually contain glaring errors. Train your eye to look for these five critical flags before you commit to paying your supplier:
- Inconsistent Font: The font type or size is not consistent across the document, or it doesn’t match the authentic documents you have received from that company before. This suggests copy-and-pasting.
- Unreasonable Dates: Thedate of issue and the required delivery date are often illogical. For example, a Purchase Order issued today demanding delivery within 24 hours for a complex order is unrealistic and rushed.
- Supplier Bank Details on the Purchase Order: A genuine Purchase Order is a promise to pay. Your supplier’s bank details should never be listed directly on the face of the Purchase Order itself. This is a common tactic used by scammers to make the document appear legitimate to you.
- Slanted or Coloured Stamps: Look closely at any physical stamps. Fake Purchase Order often feature stamps that are slanted to the bottom right or use ink colours that are inconsistent with official corporate documents.
- ‘Sole Supplier’ Item Requests: The Purchase Order requests a unique or specialist item that is supposedly only available from one specific supplier in South Africa. This is a psychological trick designed to pressure you into rushing the deal and paying that single, potentially non-existent, supplier immediately without doing your verification.
What to Do to Protect Your Business
If you spot any of these indicators, stop immediately. Even if the promised profit is huge. Your time and capital are too valuable to risk.
- Direct Verification: Never use the contact number or email address listed on the suspicious Purchase Order. Instead, use a publicly listed, verified phone number (from the official company website or switchboard) to contact the client’s procurement department directly and confirm the Purchase Order legitimacy.
- Trust Your Expertise: If the deal feels too good or too rushed, trust your gut. Scams rely on pressure to prevent you from doing your due diligence.
- Seek Professional Assistance: If you are working with a funding partner like the AAA Consortium for Purchase Order funding, their due diligence process will confirm the authenticity of the Purchase Order and the contract itself before they release funds to your supplier, providing an essential layer of protection for your business.
By staying vigilant and knowing the signs, you can successfully navigate the ‘silly season’ and secure genuine profits without falling victim to fraud.