Contractual fraud: how can you protect your business?

Contract management fraud is an often underestimated risk, even though it can have major financial, legal and reputational consequences. Some companies discover too late that clauses have been modified to their disadvantage, that signatures have been forged or that service providers have abused their trust. In the face of these threats, it is essential to put in place effective prevention and control measures.

The main forms of contractual fraud

Contractual manipulations take many forms, including :

• Falsifying documents: changing clauses after signing, forging appendices, altering dates.
• Conflicts of interest: an employee favors a service provider in exchange for personal benefits.
• Abuse of power: one party imposes disadvantageous conditions, taking advantage of a lack of vigilance.
• Fraudulent invoicing: overcharging, fictitious services or services that do not comply with contractual commitments.

Why are companies vulnerable?

A number of organizational flaws make companies particularly vulnerable to fraud:

• Inadequate validation processes: lack of rigorous control over signed documents.
• Lack of traceability of modifications: difficulty in identifying who modified what and when.
• Over-reliance on certain partners: lack of background checks on suppliers or customers.

How can I protect myself effectively?

To reduce these risks, it is essential to adopt a preventive approach and reinforce controls at several levels.

1. Implement rigorous controls

   • Always involve several people in validating contracts.
   • Use contract management tools to centralize and track changes.
   • Systematically check sensitive clauses and appendices before signing.

2. Improving document security

   • Use certified electronic signatures to prevent forgery.
   • Archive contracts in secure areas to guarantee their integrity.
   • Monitor transactions and use tools to detect contractual anomalies.

3. Training and raising team awareness

   • Organize training sessions on contract fraud and its warning signs.
   • Encourage transparency and the reporting of suspected fraud.
   • Instill a culture of vigilance and ethics in contractual decisions.

What should I do if I suspect contractual fraud?

If an anomaly is detected in a contract, it is crucial to act quickly:

• Document inconsistencies and collect evidence.
• Immediately involve the legal and financial departments.
• Suspend performance of the contract in case of serious doubt.
• Consider legal action in the event of proven fraud.

Contract fraud is a real danger that can have disastrous consequences. However, by implementing rigorous controls, securing processes and raising team awareness, companies can considerably reduce their exposure to fraudulent manipulation. Vigilance and prevention must become reflexes to ensure the security and durability of contractual relationships.