Preventing a Small Business Fraud
If you’re a small business owner and don’t have much know-how when it comes to accounting, you have to keep a closer eye on your processes and figures to avoid losing money to fraudulent activities. Having one bookkeeper manage all of your bookkeeping puts your business at a higher risk of embezzlement, which can easily go unnoticed.
The best thing you can do is break up the bookkeeping tasks, divide them among a few employees, and maintain strong internal controls. That only allow the people who are involved in bookkeeping to have access to relevant data.
Alternatively, you can find a reliable company that offers accounting services to outsource your bookkeeping in Perth. However, fraud can also be committed by people who don’t have authorized access to your data, and this includes people from outside your business. If you’re a small business owner and want to safeguard your hard-earned income and protect your livelihood, make sure you read this blog to learn seven ways you can prevent small business fraud.
Identify The Kind Of Fraud Your Business Is Exposed To
While most businesses are susceptible to a few common fraudulent activities and learn to prevent small business fraud, some arise from specific business operations. For example, accepting card or cheque payments opens up possibilities for fraud to be committed using these payment methods.
Similarly, you’ll have to monitor your cash movement more closely if you’re in the retail or hospitality business. Identifying where your business is most exposed to fraud lets you take the necessary preventative measures.
Reconcile Your Financial Accounts
Bookkeeping has a significant role in preventing fraud. Done regularly and properly, your financial accounts can give you an indication of any fraudulent activities that may have occurred in your company. If your books don’t balance and there is no explanation for it, it is something you’ll want to look into.
To Prevent Small Business Fraud – Know All Your Suppliers
Fake invoices are a common fraud that can cause your business to lose money. Verifying all your suppliers is an important step to avoiding this. Some suppliers portray themselves as more established than they are, but you can quickly run a background check on them with an internet search and look for reviews of their previous dealings.
When you engage with a new supplier, monitor their processes and behavior closely. Also, email scams with fake invoices are rife, so always double-check electronic invoices and never click on any suspicious links or downloads. If in doubt, get on the phone and speak to the supplier directly.
Approve Every Expenditure
Appoint a manager and someone in accounting to ensure all expenditures are approved. This process emphasizes the validation of each expense and can prevent unauthorized and fraudulent transactions.
Have A Fraud Policy In Place
Implement a straightforward policy and educate your employees on how fraud is not tolerated and what they can do if they suspect fraudulent activity. Also, make them aware of the consequences and actions that the company will take if a suspected or determined fraud occurs.
Keep A Close Eye On Your Business Bank Accounts
It is worth checking on your bank accounts regularly too ensure that paper-based statements haven’t been manipulated. This tip becomes especially easy to implement thanks to online banking. The key items to look for when checking your accounts are:
- Unknown payment receipts;
- Missing or out-of-order cheques;
- Payments made to unrecognized personal or business accounts.
Making your staff know you’re up-to-date with bank account statements can help prevent fraud.
Conduct Random Audits
Inform your employees that an audit will occur, but the schedule should not be discussed. Conducting a surprise audit makes it more likely for you to identify fraud, as it creates a situation to catch the fraudster off-guard.
Implementing these actions puts you in a position that gives you more involvement in your business accounting functions, making you more aware of the signs of fraudulent activity. This allows you to be proactive in handling the issue, which can prevent you from losing money. Now you know how to prevent small business fraud.