Business guide: Using AI to protect your business from scammers and bad debt

Every Australian business, from sole traders to large corporations, faces the same challenge: deciding who to trust.

A customer wants goods immediately. A new supplier asks for payment before delivery. An email appears to come from a regular client requesting that future invoices be paid into a different bank account.

In many cases the transaction is genuine.

Sometimes it is not.

Artificial intelligence is becoming one of the most useful tools available to business owners, not to replace judgement, but to improve it.

AI is the new second opinion

Business owners have long relied on accountants, lawyers and bankers before making major decisions.

AI can now become another checkpoint.

Before accepting an order, sending stock or paying an invoice, a business owner can ask an AI assistant questions such as:

• Does this email contain signs of fraud?
• What questions should I ask this new customer?
• Is this payment request unusual?
• What warning signs should concern me?
• How can I verify this business?

The cost is minimal, and the process often takes less than a minute.

Verify customers before extending credit

Many businesses lose money not because they sell poor products, but because they extend credit to customers who never intended to pay.

Before supplying goods or services on account, businesses should consider:

• Conducting a commercial credit check through an appropriate credit reporting agency.
• Confirming the business's Australian Business Number (ABN) and GST registration where relevant.
• Verifying company details with the Australian Securities and Investments Commission (ASIC) where appropriate.
• Speaking with trade referees rather than relying solely on written references.
• Confirming that delivery addresses match business premises where practical.

A modest investment in due diligence can prevent substantial losses later.

AI can help identify scam attempts

Fraudsters increasingly use convincing language generated by AI.

Ironically, AI can also help detect it.

Businesses can upload suspicious emails, invoices or contracts and ask AI to identify unusual wording, inconsistencies or common scam techniques.

While AI cannot guarantee authenticity, it can often highlight issues that deserve closer examination.

Invoice fraud continues to grow

One of the most expensive business scams involves altered banking details.

A business receives what appears to be a legitimate invoice from a regular supplier. Only the bank account has changed.

Before paying:

• Contact the supplier using a previously verified phone number.
• Never rely solely on the contact details provided in the email requesting the change.
• Ask AI to review the email for signs of impersonation or urgency designed to pressure payment.

A five-minute verification process can prevent a loss that may never be recovered.

Train staff to use AI responsibly

Employees are often the first line of defence.

Businesses should encourage staff to:

• Question unusual requests.
• Verify unexpected payment instructions.
• Check suspicious emails with AI before responding.
• Escalate concerns rather than feeling pressured to act quickly.

AI works best when combined with clear internal procedures and experienced human judgement.

Protect your own reputation

Businesses also need to consider how criminals may misuse their own brand.

Scammers frequently impersonate legitimate companies to deceive customers.

Regularly monitoring online mentions, warning customers about common scams, and encouraging clients to verify unusual requests can reduce both financial losses and reputational damage.

AI is not a replacement for professional advice

Artificial intelligence is an excellent research assistant and can quickly identify potential risks, but it should not replace legal advice, accounting advice or professional credit assessment where significant financial decisions are involved.

Think of AI as an intelligent member of the risk management team rather than the person making the final decision.

The Business Times View

Every business owner understands the value of checking stock before it leaves the warehouse. Increasingly, the same discipline should apply to customers, suppliers and payment requests.

Artificial intelligence gives Australian businesses a fast, inexpensive way to perform an additional layer of due diligence. Combined with commercial credit checks, independent verification and sensible internal controls, it can reduce exposure to fraud, bad debts and costly mistakes.

In business, prevention is almost always cheaper than recovery. AI is rapidly becoming one of the simplest and most effective tools available to help achieve that goal.