5 Ways to protect your Small Business from Fraud
Fraud management requires the implementation of various strategies to ensure that funds and any potential losses are avoided. Many small businesses struggle without an effective fraud management plan in place. The right strategies and solutions are necessary to stay ahead of the game. If you want your small business to stay fraud-free, it’s crucial to act now.
The most common fraud incidents in small businesses.
1. Payroll fraud: Payroll fraud is common to all businesses but twice more frequently in small businesses with fewer than 100 employees than larger ones. Small business owners must gain a working knowledge of the payroll system and enforce accountability among bookkeepers in their monthly reports
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2. Cash theft: There are different ways cash can disappear in a business setup. Whether through skimming, when an employee takes cash that hasn’t been reported into the accounting system, or fraudulent disbursement where an employee releases funds that haven’t been authorized by the owner, cash theft creates a negatively cumulative impact on the bottom line. From the outset of setting up a business, as a small business owner, you need a streamlined cash monitoring process, both for an effective financial process and also to maintain essential supervision of cash within the business.
3. Online banking: The increased popularity of online banking has also increased the likelihood that funds could be transferred to mysterious accounts. Owners should schedule regular meetings with the accounts team to monitor all transferred money. Cybercrime has never been more sophisticated and small business owners need to arm themselves with updated information on threats to respond accordingly with their relevant financial institution.
4. False invoicing: As business owners, you must have basic oversight over every vendor in your business because false invoicing is an increasingly popular fraud method. It often strikes when an employee creates false suppliers or when he or she pays a legitimate supplier and diverts the cash into an alternative account.
How to prevent fraud negatively impacting your business
- Accurate record-keeping
All records must be handled and managed properly so that you can prove the transactions are legitimate and free of errors. The safety and security of your small business depend on how the organization handles its documents. The most basic step you can take is to carefully examine any documents for any personal or business information that you might send or receive by email or any other form your business uses.
- Do employee background check
When expanding your workforce, it’s important you find people who are not only qualified but also trustworthy. It is advisable therefore before hiring, to do a background check and know exactly who you are trusting in your company. The consequences of employees accessing sensitive information in ways not authorized are dangerous for a company and its customers, so it’s important that you choose the right employees aside from implementing effective fraud management strategies and policies.
- Protect your bank accounts
If you haven’t created separate bank and credit card accounts for your personal life and business, do so now. If hackers get their hands on one account, they won’t have access to the other and vice versa. Look into the security systems your bank uses for online banking to be sure things like automatic logout are available. You can also handle bills online so there are a few paper bills displayed around an office as possible. The more paperwork there is, the more likely that a bill with banking information could fall into the wrong hands.
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4. Educate Your Employees
Fraud can harm the entire business organization, whether big or small. If you’re an employee, it can be unsettling to find out that your company has been the victim of fraud. If you feel that your company needs to implement fraud prevention measures, take the time to assess whether your staff has the right knowledge and skills to detect and prevent fraud.
- Seek professional support
Fraud management solutions can be used by small businesses in identifying and mitigating risks. These systems are offered by a fraud management company to ensure that small businesses are equipped with the right tools to evaluate their current status and performance. As a small business owner, if you cannot handle the rate at which fraud activities are in your organization, you can always try the experts for efficiency.
Fraud in any business industry can cause great damage, this affects all sizes of business organizations. However, small businesses face the most unique risks when compared to larger firms. However, by taking appropriate steps and measures you can take part in preventing fraud or theft.
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