By the Inquest Global Risk Advisory Team · Oct 23, 2026

The supplier had been with the company for six years. Deliveries arrived on time. Invoices were neat and correctly formatted. The procurement manager who handled the account was regarded as one of the most dependable people in the finance function. He rarely took leave, and he never missed a deadline.

Then a routine system migration required the company to re-validate its vendor master data. A few small details surfaced. The supplier’s registered address appeared to be a residential flat. Its prices had risen steadily for four consecutive years, while comparable suppliers in the market had held their rates. And every contract renewal in six years had been approved without a single competing quotation.

None of these details had been hidden. Each one had been seen, at some point, by someone in the organisation. The problem was that no one had a reason to connect them.

That is how procurement fraud most often works. Not through elaborate schemes, but through small, ordinary-looking gaps that sit quietly inside trusted processes.

Why procurement is so exposed

Procurement sits at the point where an organisation’s money meets the outside world. It involves judgment, relationships and discretion, and it often moves at speed. Those same qualities make it efficient, and also make it vulnerable.

Procurement-related fraud is commonly cited in fraud risk surveys as one of the more frequent forms of occupational fraud. It can take many shapes: inflated pricing, fictitious or conflicted vendors, kickbacks, bid rigging, duplicate billing, or payment for goods and services that were never fully delivered.

What these schemes tend to have in common is that they rarely announce themselves. They are designed to look like normal business.

Why organisations miss the signs

In our experience, procurement fraud is usually not missed because controls are absent. It is missed because of how organisations naturally operate.

Trust replaces verification. Long-standing vendors and long-serving employees are rarely re-examined, precisely because they have never caused problems. Familiarity becomes a substitute for scrutiny.

Information is fragmented. Finance sees the invoices. Procurement sees the contracts. Operations sees the deliveries. Internal audit sees a sample. No single team sees the whole pattern.

Small anomalies feel harmless. A slightly higher price, a skipped quotation or an invoice just below an approval threshold rarely looks significant on its own. It is the accumulation that matters.

Raising concerns feels costly. Questioning a respected colleague or a key supplier can feel disloyal or disruptive, particularly without clear evidence. So concerns often go unspoken.

The warning signs below are not proof of wrongdoing. Many have entirely innocent explanations. But when several of them appear together, around the same vendor, team or individual, they deserve a closer and more structured look.

The red flag is rarely invisible. It is usually unconnected.

Six signs worth a second look

1. A vendor no one else seems to know

A supplier with a very limited public footprint, a recently incorporated entity winning substantial contracts, or a registered address that appears residential or shared with several unrelated businesses.

These traits do not automatically indicate a problem. Many legitimate small businesses operate this way. But they can sometimes point to an intermediary or shell entity, or to a business with an undisclosed link to someone inside the organisation.

What organisations can do: Verify legal registration, beneficial ownership and directorships at onboarding, and refresh these checks periodically for high-value or high-risk suppliers.

2. One approver, one vendor, every time

The same individual consistently identifies, approves and manages a particular supplier, and may resist others becoming involved in the relationship.

Concentrated control weakens the natural checks that segregation of duties is designed to provide. It also means that if something is wrong, the person best placed to notice it may also be the person with the most reason not to report it.

What organisations can do: Review approval patterns for significant vendors, enforce segregation between sourcing, approval and payment, and rotate responsibilities where practical.

3. Prices that drift upward quietly

Gradual, year-on-year price increases on a long-standing contract that are not reflected in the wider market, or that are accepted without renegotiation.

Incremental increases attract far less attention than a single large one. Over several years, however, the difference between contract price and fair market value can become substantial.

What organisations can do: Benchmark key contracts against market rates at every renewal, not only at initial onboarding, and require documented justification for increases above an agreed level.

4. Competitive bidding that is not really competitive

Quotations that are consistently close in value, competing bids that share similar formatting, contact details or errors, or a preferred supplier that always wins by a narrow margin.

Patterns like these can point to coordinated bidding, or to quotations obtained simply to satisfy a policy requirement rather than to test the market.

What organisations can do: Review bidding history over time rather than tender by tender, and check for ownership or personnel links between bidders.

5. Invoices that are almost right

Invoices split to stay just below approval thresholds, duplicate billing with minor variations in reference numbers or amounts, or charges for services that are difficult to verify independently, such as consulting, maintenance or “miscellaneous” work.

Small, repeated irregularities can add up to significant losses while staying below the level that would normally trigger review.

What organisations can do: Use periodic data analysis on payment records to identify threshold-splitting, duplicate payments and unusual billing patterns, and require evidence of delivery for hard-to-verify services.

6. Behaviour that does not quite fit

An employee who rarely takes leave, is unusually protective of particular files or vendor relationships, becomes defensive when routine questions are asked, or whose lifestyle appears inconsistent with their role.

These are widely recognised behavioural indicators in fraud risk frameworks. On their own, they mean very little; people have many legitimate reasons for how they work and live. Alongside transactional red flags, however, they can add useful context.

What organisations can do: Treat behavioural signals with care, fairness and discretion. They are a reason to look more closely at the facts, never a basis for conclusions about a person.

When a pattern becomes a reason to investigate

A single red flag rarely justifies an investigation. A cluster of them often justifies a structured review.

Organisations may want to consider bringing in independent specialists when:

1. Several of the signs above appear around the same vendor, function or individual.
2. Internal reviewers may have a conflict of interest, or the matter involves senior personnel.
3. The facts need to be established to a standard that can support disciplinary, legal or recovery action.
4. Discretion is essential to protect the organisation, the individuals involved and the integrity of the evidence.

At this stage, the priority is not to confront anyone. It is to establish facts. Premature accusations can damage working relationships, alert those involved, lead to the loss of records and, where suspicions turn out to be unfounded, cause real harm to people who have done nothing wrong.

A well-run enquiry is objective, proportionate and lawful. It protects the organisation, and it protects the innocent.

Prevention: making the next red flag easier to see

Investigation addresses what has already happened. The greater value often lies in reducing the chance that it happens again.

Practical measures organisations can consider include:

• Risk-based vendor due diligence at onboarding and at regular intervals, with greater depth for high-value suppliers.
• Conflict-of-interest declarations for employees involved in sourcing and approval, reviewed and refreshed annually.
• Clear segregation of duties between those who select vendors, approve purchases and release payments.
• Periodic data analytics across procurement and payment records to surface patterns no individual reviewer would see.
• A trusted, confidential reporting channel so that employees and suppliers can raise concerns without fear of retaliation.

None of these measures assumes that people are dishonest. They simply ensure that trust is supported by verification.

Key takeaways

• Procurement fraud usually hides inside normal, trusted processes.
• Individual red flags are signals, not proof. Patterns are what matter.
• Independent, discreet and lawful fact-finding protects both the organisation and the people involved.
• Prevention is strongest when vendor due diligence, controls and data analysis work together.

How Inquest Global approaches procurement and vendor risk

At Inquest Global, procurement and vendor fraud reviews are approached as fact-finding exercises, not accusations. Our work typically combines lawful vendor and ownership verification, transaction and pattern analysis, contract and pricing review, and discreet enquiries, with findings documented clearly and objectively so that leadership can make informed decisions.

Just as importantly, we help organisations look ahead: strengthening vendor due diligence, approval controls and early warning indicators, so that the next anomaly is noticed sooner and understood faster.

The goal is not simply to find out what went wrong. It is to help organisations know more, risk less and decide better.

A final thought

Trust is essential in every business relationship. Verification is what keeps that trust well placed.