Fraud can take many
forms, from scammers who defraud small businesses, to employees who steal from
their employers. Since the 2007 recession, fraudulent activity against small
businesses has increased, as has the amount of money lost to fraud.
Between fraud losses
and lost profits due to the downturn in the economy, small business owners face
increased pressure to make a profit margin, and stay in business. Here are five
tips offered by SDC CPAs forensic accountants on how to keep your small
business safe from fraud.
Five Tips to Protect Your Business
Against Fraud
1. Stay alert
Although it sounds
obvious, many small business owners are not alert for possible fraud. Some spend
a lot of time away from the office, while others simply trust too much those
around them. However, the truth is that preventing fraud requires both
monitoring the work area and your team, carrying out constant inventory
controls and updating registration systems.
2. Install security
cameras
This is especially
recommended if you have a warehouse or there are areas in your business that
remain unattended most of the time. It is also a good idea to place a camera on
top of the cash registers to discourage theft. Some security cameras include
systems that can transmit images directly to your phone, wherever you are. Moreover,
some of these cameras don't even require professional installation.
3. Have a clearly
written regulation
Every small business
owner should have a clearly written definition of workplace fraud, and should
outline what fair and reasonable actions managers should take if fraud is
suspected. All employees must receive a personal copy of the regulations, both
as a separate document and as part of a reference manual on labor procedures.
The employer must keep copies of the regulations signed by all employees, and
management must insist on carrying out all consequences of violations of the
regulations.
4. Conducts a detailed
background check on each prospective employee
Although a detailed
background check on each new employee will incur additional expenses, the cost
of this review is economic insurance against a potential criminal that could
end up costing your company thousands of dollars in losses. Online public
records searches alongside standard credit records can better acquaint a
potential employee.
5. Always check
references
Before hiring a new
employee, always ask for both personal and professional references. As reported
by SDC CPA, nearly three in ten employers have encountered a false job
reference and 62 % of previous employers did not say favorable things when
contacted to discuss a candidate. However, most employers don't bother to
double-check employee references before hiring them. Do not be one of them.
