Fraud is one of those things we’d like to think happens to other people (while hoping it never happens to us).
A recent survey found that nearly half (45%) of small businesses have been the victim of some sort of fraud in the last 12 months, and of those, most (93%) were unable to recover more than half of their losses.
Sadly for business owners, there are many types of fraud that a small business can find themselves on the wrong end of – both from external and internal sources. But there are some things you can do to try and put a stop to it before it starts.
Spread important jobs out amongst multiple people
Embezzlement often occurs when only one person is doing a critical job. With nobody else to witness what’s going on, it can go unchecked for months or for tens of thousands of pounds – with the crime only being discovered once it’s too late to recover. Using accounting software such as Quickbooks Online means that multiple people can log in from almost anywhere to either update or take a look at what’s going on in your company’s books.
We’ve talked about the important of a digital audit trail for HMRC’s Making Tax Digital, but it can also help you stave off fraud. Ensuring your business processes have a suitable audit trail (preferably digital – as this is more difficult to tamper with) can put off potential fraudsters before they begin. If you are the unfortunate victim of fraud, a decent audit trail can lead you right to the culprit.
Take your time in the hiring process
We know that bringing in new talent can be costly, both in terms of time and money. But it’s a hassle that’s worth doing right. Take the time out to check references and perform background checks, if necessary – particularly if your potential new employee is going to be handling the money side of things.
Get to know your clients/suppliers
Of course the potential for fraud is just as likely to come from outside your business. You could find a dodgy customer trying to pay with fake card details or a phishing scam email disguised as an invoice from one of your regular suppliers. In some instances, there’s little you can do, but educating your staff and yourself on things to keep an eye out for can really pay off. If something seems wrong, don’t ignore it. If a customer tries to bypass your regular processes or changes their usual routine in any way, be sure to question it.
Ensure your security systems are up to date
Cyberfraud is on the increase and can end in catastrophe. Whether it means the loss of data, access to your business accounts or fraudulent emails sent from your company, it’s never been more important to ensure your security systems are tip-top. Ensure your computers all have a decent firewall, as well as anti-virus, malware and spyware protection. Train your staff to use strong passwords that are changed regularly (‘password’ is not an acceptable password!), and you can even invest in some encryption software to really boost your defences.
For a trustworthy and secure accounting service, be sure to give us a call to find out more.