Fraud scams are a sad reality in today’s business environment. With cases of identity theft and financial fraud on the rise, businesses, more than ever, need to learn how to safeguard themselves. The following tips can help small businesses limit their exposure to fraud.
1. Commit the resources. Compared to larger companies, small businesses tend to be more susceptible to fraud due to the limited fraud prevention resources and control measures put in place. Small business owners often overlook prevention controls which is unfortunate as any loss occurred by fraud may have a big impact a small business’ bottom line.
2. Educate yourself. From billing schemes to payroll fraud to cheque tampering, the best way to prevent fraud is to educate yourself and your employees of the various types of fraud scams that could potentially impact your business.
3. Establish anti-fraud policies. It’s vital to assess which fraud schemes pose a greater threat to your specific business. From there, you can develop processes to help limit these risks. Some examples include: Using a paper shredder to destroy all confidential documents, and ensuring two people sign off on all cheques and provide expense approval.
4. Establish hiring practices. Fraud isn’t just limited to outside sources. In many cases, fraud is often conducted inside the company. When hiring employees be sure to check references and verify past employment.
5. Conduct surprise audits and inventory counts. Conduct surprise audits and reviews of specific areas or departments of your business that are more vulnerable to fraud. Also, high-value items should be inventoried regularly.
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