Five Ways Small Business Can Prevent Employee Fraud

 

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.