How to prevent buyer fraud and protect trade receivables

Strategies for detection and prevention

Authors

Christian Bürger

Senior Editor

23 Apr 2026

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Buyer fraud is increasing across many sectors as supply chain pressures and digital ordering processes create new vulnerabilities. For suppliers, understanding how fraudsters operate and how to spot early warning signs is essential to protect revenue and maintain healthy cash flow.

How fraud is carried out

Buyer fraud occurs when a company orders goods or services on open account with no intention of paying and then avoids its creditors. To do this, fraudsters try to appear creditworthy so they can obtain goods or services without upfront payment.

The most common forms of buyer fraud in B2B trade include:

Setting up a fake business

Some fraudsters create a business solely to deceive suppliers over a short period. They usually place several small orders across unrelated sectors, quickly sell the goods at very low prices, and then disappear with the cash.

Acquiring dormant companies

Instead of starting a new firm, fraudsters may buy companies whose operations have ceased and that have no outstanding issues or bad debts. This gives them a long established business with a clean payment history, although all positive indicators relate to the previous owners. In some cases, old balance sheets are produced or manipulated to reinforce the appearance of strong creditworthiness.

Bust out tactics

Fraudsters build trust by placing small orders and paying on time. Once they appear reliable, they place a large order. The goods are delivered, but the invoice is never paid. After receiving the goods, the perpetrators vanish, resell the items quickly, or file fraudulent bankruptcy.

Buyer impersonation

Fraudsters pose as established, creditworthy companies by placing orders in their name and requesting delivery to a false address or offering to collect the goods themselves. Suppliers then invoice the genuine company, which denies placing the order. This is common in the food, construction, electrical goods retail, and IT sectors, but affects all industries.

The negative impact

Buyer fraud threatens the integrity of orders, payments, and fulfilment. Its consequences can be immediate and severe, including loss of revenue, disrupted cash flow, damaged trading relationships, and greater vulnerability to repeat attacks.

Fraud detection: warning signs in buyer behaviour

Fraud attempts often involve inconsistent communication, unusual payment preferences, or incomplete business information. Any single red flag may not indicate fraud, but the more that appear, the greater the concern.

Common warning signs include:

Contact only via mobile phone, with no landline provided, or the use of free email accounts
A professional looking website with limited or non functional features
Email domains that imitate legitimate brands with altered letters, added characters, or spelling mistakes
A buyer who shows little interest in price and does not negotiate
Very short timeframes between first contact, order placement, and requested delivery
A small initial order followed by several similar orders, then a sudden large order
A buyer offering to collect goods in an unbranded vehicle
Last minute requests to change the delivery address
Orders that don’t match the buyer’s usual business (e.g. a fruit wholesaler buying computers or cosmetics)
Excessively eager provision of references or documents
Reluctance to make advance payments
A buyer exerts pressure and wants to prompt swift action

What suppliers can do in advance for fraud detection

Several measures can significantly reduce the risk of fraud. Suppliers should check whether a customer is genuine by considering:

How long the company has been operating (is it newly formed?)
Whether it is a family business
Its legal structure
The contact name, landline number, and website and whether these details are genuine. Fraudsters often rely on mobile numbers and free email accounts
Whether the website has normal functionality or shows signs of being fake. Search for an alternative version of the website as impersonators often create convincing duplicates with slight name variations
The quality of spelling and grammar in any documents supplied
The authenticity of the delivery address, for example by using Google Street View
Training for delivery crews to deliver only to the agreed location and report anything suspicious before unloading
Independent verification of the company’s contact details rather than relying on those provided by the buyer
Refusing to change delivery addresses once goods are in transit
Ensuring existing customers still follow usual ordering procedures and questioning sudden ‘urgent’ or informal orders

While these steps do not eliminate fraud risk, they significantly reduce exposure.

How credit insurance supports fraud detection

Strong internal controls help prevent fraud, but even the best teams may miss sophisticated attempts. Credit insurance adds extra layers of protection, monitoring, and financial support.

Credit insurers maintain large datasets and advanced systems to identify potential fraud early. They gather and share intelligence from claims data, global trading networks, and partners. They continuously assess buyers’ financial health, behaviour, and any early warning signs. Their services include credit checks, identity verification, credit limit approvals, and alerts about suspicious activity. They may also provide financial compensation if fraud occurs.

Business fraud can be effectively prevented, particularly when robust internal control mechanisms are complemented by credit insurance. Together, these measures establish a strong and reliable framework of protection.

To explore how to strengthen your own credit risk strategy, get in touch with us and see how we can help you stay ahead.

Summary

Buyer fraud is rising as fraudsters exploit digital ordering processes and supply‑chain pressures to obtain goods without paying
Common fraud tactics include fake companies, misuse of dormant firms, “bust‑out” schemes, and impersonation of legitimate buyers
Warning signs include unusual communication patterns, urgent or inconsistent ordering behavior, suspicious contact details, and sudden changes in delivery instructions
Fraud risk can be reduced through thorough buyer verification and strengthened further by credit insurance, which provides monitoring, intelligence, and financial protection