The Relationship That's "Been Fine for Years"

Every business has at least one vendor relationship that nobody really questions anymore. They've been around longer than half the staff. Invoices come in, get approved, get paid. Nobody reads the line items closely because, well, it's that vendor — they're reliable.

That comfort is exactly the environment vendor fraud thrives in. Not dramatic heists. Just small, repeated gaps — a slightly inflated invoice here, a shipment that's a few units short there — that nobody's incentivized to notice because checking takes time and the relationship "works."

I want to walk through the three ways this most commonly plays out, why they're so hard to spot from the inside, and the handful of controls that actually catch them — most of which don't require new software, just a different habit.

The Three Patterns That Show Up Again and Again

Vendor fraud takes a lot of shapes on paper, but in practice almost all of it falls into three buckets. Once you can name the pattern, it's a lot easier to spot.

1
Overbilling The invoice says more than what was actually agreed or delivered — a higher quantity, a higher grade of material, or a price that's quietly crept up from the original quote. On its own, one overbilled invoice looks like an error. Repeated over months, it's a pattern that adds up fast and rarely gets challenged because each individual instance feels too small to flag.
2
Short shipments The invoice matches what was ordered, but the delivery doesn't. Ten units billed, eight units arrive — and unless someone is physically counting against the purchase order at the dock, this goes completely unnoticed. It's especially common with bulk goods, raw materials, or anything sold by weight or volume where a small shortfall is hard to eyeball.
3
Kickback schemes This one involves someone on the inside. A buyer or procurement employee steers business toward a particular vendor — even when better quotes exist — in exchange for a personal payment. These tend to be less frequent than the first two, but when they're found, the numbers involved are usually much larger, and they've often been running for years.
💡 Why these stay hidden

None of these require anything dramatic. Overbilling and short shipments often look exactly like "normal" errors — the kind every business writes off occasionally. Kickbacks hide behind a relationship that looks completely professional from the outside. That's the whole point. Fraud that looks unusual gets caught fast. Fraud that looks routine doesn't.

Why a "Small" Gap Is Never Actually Small

Here's the thing about vendor fraud — it's rarely a single big number. It's a small percentage, repeated across every invoice, for as long as nobody's checking. And procurement spend tends to be one of the largest line items on a business's books, which means even a tiny percentage translates into real money.

Annual Procurement Spend If 1% Is Lost to Vendor Fraud If 3% Is Lost
$500,000 $5,000 / year $15,000 / year
$2,000,000 $20,000 / year $60,000 / year
$10,000,000 $100,000 / year $300,000 / year

And that's before you account for how long it usually runs before anyone notices. Fraud surveys consistently find that procurement and billing schemes run for years, on average, before detection — partly because the amounts are small enough each time to stay under the radar, and partly because nobody's specifically looking.

"The math on vendor fraud isn't about one bad invoice. It's about what happens when the same small gap repeats fifty times a year, for three years, and nobody ever added it up."

— PreventLoss.org

The Single Control That Catches Most of This

If there's one thing worth implementing before anything else, it's three-way matching. It sounds technical, but it's a simple idea: before any invoice gets paid, three documents have to agree.

Document What It Confirms Created By
Purchase Order What was actually agreed — quantity, price, terms Your procurement team
Goods Receipt Note What was actually received — checked at the dock Your warehouse / receiving team
Supplier Invoice What the vendor is asking to be paid for The vendor

When all three line up, the invoice gets paid without anyone needing to think twice. When they don't — say the invoice says 100 units but the receiving note says 92 — the payment gets held until someone explains the gap. That's it. No new software is strictly required; even a simple paper-based version of this, done consistently, closes most of the overbilling and short-shipment gap on its own.

The reason this works so well is that it removes the need for anyone to "remember" to check. The check is built into the process. Nobody has to be suspicious of anyone — the documents either agree or they don't.

Spotting a Kickback Without Becoming Paranoid

Kickbacks are the tricky one, and honestly the one I've seen people misjudge most. They don't show up as a mismatch on paper — the invoice, the receipt, everything lines up perfectly fine. What's wrong isn't the documents. It's the decision behind the relationship, and that's a lot harder to put your finger on.

Still, over the years a few patterns keep showing up enough that I've stopped calling them coincidences.

  • !
    One vendor keeps winning, even when they're not the cheapest. Sometimes that's totally fine — quality, reliability, or speed can justify a higher price. But if it's the same vendor winning across every category one particular buyer handles, that's worth a second look.
  • !
    Pushback on getting competitive quotes. There's always a reason ready — "they're the only ones who can deliver on time," "we tried someone else before and it was a mess." Could be true. I've also heard that exact line used to shut down a conversation that needed to happen.
  • !
    Vendor details that overlap with someone's personal details. A registered address that happens to match an employee's home address. A phone number one digit off from someone on the procurement team. Sounds far-fetched until you actually run the check and find it.
  • !
    Invoices that land suspiciously close to the approval limit. If your sign-off threshold is $10,000 and a vendor's bills keep coming in around $9,800–$9,950, that's either a wild coincidence or it isn't.
⚠️ A word of caution

None of this proves anything by itself, and I want to be clear about that. Long vendor relationships are often genuinely valuable — loyalty isn't a red flag on its own. These signals exist so you know when a relationship deserves a closer, friendly look. Most of the time that look turns up nothing, and that's a good outcome too. Occasionally it turns up something worth knowing now instead of in three years.

What Actually Helps — Without Slowing Everything Down

None of this needs to turn procurement into a bureaucratic maze. The goal is a handful of habits that make fraud hard to hide, not a process so heavy that legitimate vendors start avoiding you.

  • ✓
    Separate who orders from who approves payment. If the same person can raise a purchase order, receive the goods, and approve the invoice, there's no check at all — just one person's word. Splitting these across two people, even in a small team, closes the biggest gap.
  • ✓
    Check deliveries against the order — every time. Not just signing for "a box arrived," but actually counting against the PO before it's logged as received. This is the single habit that catches short shipments.
  • ✓
    Rotate who manages key vendor relationships occasionally. Not because anyone's assumed to be doing anything wrong — but a fresh set of eyes on a long-standing relationship sometimes notices something a familiar one stopped seeing.
  • ✓
    Spot-check invoices against actual contracts and quotes. Pull a handful of invoices each quarter and check the pricing against what was originally agreed. Price creep is common, rarely malicious, and almost never caught unless someone looks.
  • ✓
    Get competitive quotes periodically, even for "reliable" vendors. You don't have to switch. But knowing what the market actually charges keeps everyone — including good-faith vendors — honest.
  • ✓
    Make it easy and safe to raise a concern. If someone on the receiving team notices a pattern of short deliveries, or someone in finance notices odd pricing, they need a way to say so that doesn't feel like accusing a colleague of something serious.
✅ Where to start if this all feels like a lot

If you do nothing else, do two things: make sure deliveries are checked against purchase orders before being logged as received, and make sure the person approving an invoice isn't the same person who placed the order. Those two habits alone close most of the gap — and they cost nothing to implement.

Frequently Asked Questions

Overbilling and short shipments are by far the most common — charging for more than what was agreed, or delivering less than what was billed. Kickback schemes happen less often, but tend to involve much larger sums and run for longer before anyone notices.
It's a simple check before any invoice gets paid: the purchase order, the goods receipt note, and the supplier invoice all have to agree on quantity and price. If they don't line up, the payment gets held until someone explains why — instead of being paid automatically.
A few patterns are worth watching: one vendor consistently winning despite not being the cheapest, resistance to getting competitive quotes, vendor details that overlap with an employee's personal details, and invoice amounts that conveniently sit just under approval thresholds. None of these prove anything on their own — they're just worth a closer, friendly look.
Yes — and often more easily than larger ones. Checking deliveries against purchase orders, splitting the "who orders" and "who approves payment" roles between two people, and occasionally getting a competitive quote are all things a small team can do without any new systems. The habits matter more than the tools.

The Vendors You Trust Most Are the Ones Worth a Second Look

None of this is about distrust. Most vendor relationships are exactly what they appear to be — reliable, fairly priced, and worth keeping. But the comfort that comes with a long relationship is precisely what creates blind spots, on both sides. A vendor who's been "fine for years" is also a vendor whose invoices haven't been closely checked for years.

The fix isn't suspicion. It's structure — a process that checks itself, so nobody has to rely on memory, trust, or the assumption that everything's still fine just because it has been so far.

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