No business is ever safe from fraud! Although many think that fraud only involves large enterprises or global corporations that news programs report on, it actually occurs much more frequently on a smaller scale.
In fact, fraud often occurs in a quieter arena with a smaller bank balance and fewer employees. It can happen to the local family owned or similar small to medium businesses anywhere at any time – and you may not even know it has happened.
Is Your Small Business At Risk of Fraud?
Contrary to what many think, small businesses provide an excellent opportunity to commit fraud. The financial strain, lack of resources and expertise, and rapid growth of small companies make it easy for ill-intentioned people to take advantage of these businesses.
No one wants to think that their employees would do anything to harm a company’s growth, but it is a possibility that you must consider. Believing that you won’t fall victim to occupational fraud will only increase your chances of being involved in a fraudulent scheme!
Some would say that doubting your team harms the culture and morale of the company, but being cautious is crucial to your organisation’s success. If you begin to rely on trusted employees and don’t have proper controls in place, your business will become vulnerable to motivated fraudsters!
How to Prevent Fraud
There’s no way to control people’s thoughts and actions; you can’t stop your employees from wanting to commit fraud or plan to pinch the company’s funds. Just because it’s near impossible to detect if you have a fraudster on your team doesn’t mean that you can’t protect your company—through a few ways, you can deter fraud and recognise it as soon as it happens!
As a small business owner, you must be extra vigilant about fraud! Here are some ways you can protect your business from occupational fraud:
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Learn About Your Employees
Are you sure you know enough about your employees? Unfortunately, many fraudsters manage to be hired in small businesses because of the lack of anti-fraud controls and policies. If you haven’t conducted a thorough background check on your employees yet, then start now!
More than being qualified, your employees must also be trustworthy! Don’t rely on your employees’ references and work history alone—make sure to check if they were involved in any suspicious and criminal activity just to be safe.
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Hire an Accounting Expert
Fraud can happen in a variety of ways—your company could suffer from billing fraud, cash theft, stock loss, and fictitious supplier schemes, among others. Watching out for the warning signs of fraud on top of running a business isn’t easy; you’re bound to miss a few things here and there.
However, if you invest in accounting and bookkeeping services, you’ll be able to dramatically decrease the chances of being involved in a fraudulent scheme. A business accountant can protect your company from any type of fraud and even help you establish anti-fraud policies and procedures.
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Protect Your Data
Don’t leave your computer network vulnerable to cyberthreats—consider implementing policies and processes across your business so that your data won’t be stolen and you are not taken advantage of. Make sure to have a sturdy firewall, install antivirus software, and work with a cyber protection professional to keep your files and confidential information safe.
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Train Employees To Prevent Fraud.
Employees in fraud-prone areas of the business should know the warning signs of fraud, prevention skills and how to report suspicious behaviour or actions by co-workers and customers. Establishing an anonymous reporting system or process is one way to encourage speaking out against fraud. Management, including owners of small businesses, should create an environment and implement policies that make it clear that unethical behaviour will not be tolerated.
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Maintain Internal Controls
Even small businesses need to create and maintain internal controls that can prevent or detect fraud. Examples include:
-Restricting access to financial & accounting data.
-Have approval process for ordering & inventory purchases as well as establishing multi-person checking / sign-off on inventory delivery
-Approval for voiding transactions in a Point of Sale systems,
-Approval for how overtime is managed, cash handling processes, and other accounting or payroll functions.
A good way to test the strength of these systems is having an external business such as an accountant to perform a review or test of your business controls.
Anyone can fall victim to fraud or theft—especially your small business! If you want to thrive and survive for the years to come, you must employ necessary anti-fraud policies and precautions. Often in times of uncertainty (such as in the current pandemic we are facing) people look for opportunities when there are weak controls in place. As long as you remain sceptical and careful, your business won’t have to suffer from any losses.
Do you want to protect your business from fraud? Then let our skilled business accountants and bookkeepers at MKS Group help you! A business health check and review of your controls on financial records can provide you with valuable information. We also provide end-to-end accounting and bookkeeping services that help scale & grow businesses with tailored solutions. Contact us today to learn more 9374 8400
