Protect Your Business from 4 Common Fraud Sources

5621813850_e45e5522e6Photo courtesy of Orange Sparrow

The news media is flooded on a regular basis with tragic stories about the victims of consumer fraud. On the flipside are the businesses that are also being taken advantage of – typically smaller to midsize companies with a lack of formality that is standard in larger corporations.

If you are a small business owner, you need to be aware that the number of fraudulent crimes against businesses are indeed increasing. In fact, 88% of small to midsize businesses in the United States have reported at least one instance of fraud. These companies have also shown to have a decline in their overall financial success, which makes the case for taking a closer look at what you can do to stay safe.

In order to safeguard your company from becoming a fraud victim, become more informed by taking steps to educate yourself about potential fraud sources and how to protect yourself and your business.

Insiders – Especially in small businesses, the relationships between business owners/bosses and employees is different than in large corporations. Because small-business owners typically entrust their employees to a fault, they unfortunately put their businesses at risk. In a 2009 survey carried out by PriceWaterhouseCoopers, 76% of business fraud was performed by employees or someone who was an insider and familiar with company procedure.

Clients/customers – Theft is the most obvious source of fraud committed by customers, but there are actually many other ways in which clients and customers can perform fraud against a company. These include: using stolen credit cards, writing fraudulent checks, false return scams and false injury or ‘slip and fall’ claims.

Vendors/contractors – All too often, small-business owners are grossly overcharged by contractors for services, and many times, the services in question were either sub-par or not provided at all.

Hackers – Today, electronic fraud in the form of hacking, identity theft, phishing and other forms of data breach crimes are some of the most problematic cases of fraud occurring against business owners because the hackers are often very good at what they do, which means they are undetectable.

In order to protect yourself and your company against these and other types of fraud, we advise our clients to adopt stricter anti-fraud practices within the workplace. First and foremost, you must provide your employees with a safe and anonymous system in which they can report their suspicions if they have a reason to suspect another employee or insider of committing a fraudulent act. Anonymity is key, because co-workers do not like to rat each other out.

It’s a really good idea to randomly surprise your employees with unscheduled internal audits and every so often, hire a professional team to externally audit all of your business accounts and inventory. This will keep your employees on their toes, and will reduce temptation to commit fraud. Ensure that your business has clear written policies when it comes to any type of money handling.
Tighten up your hiring policies by performing strict background checks on any potential new employees.

If you feel that you have already been a victim of small business fraud, please contact our office today so that we can assist you.  Don’t let fraud fall by the wayside – take steps to rectify the problem now so that your company can continue to thrive.

 

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One Response to Protect Your Business from 4 Common Fraud Sources

  1. Pingback: Can a Low Credit Score Affect My Success as an Entrepreneur? | Veitengruber Law

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