When building a business, you have to trust people. While you may hire great employees and use trusted vendors, there are always people that will misrepresent themselves to try to take advantage of you and your hard-earned money. Many businesses focus on growth and innovation while ignoring due diligence and risk management.
Because there are scammers out there you have to be vigilant in protecting yourself. You don’t want to be vulnerable to fraud. Fortunately, there are things you can do to protect yourself and your enterprise.
Here are 10 strategies on how to prevent frauds in business:
1. Understand Your Business
You are the one that started your business and you should know everything about it. Understand all the products and services you offer and know your suppliers, vendors, and customers well. Knowledge is power. Make sure you implement the standards and protocols in your operation. Employees need direction and it’s up to you to guide them. When you understand how all departments work you will be able to spot any discrepancies.
2. Know Your Employees
Knowing your employees is a key strategy on how to prevent frauds in business. Be involved in day-to-day operations and get to know every staff member. When hiring, make sure to follow a formal hiring format and stick to it. Every person that applies for a position that handles cash, manages customer payments or uses bank account information should go through a thorough background check. Consider outsourcing your bookkeeping and payroll if you suspect any fraud.
3. Separate Duties
You shouldn’t have one employee handling all the financial paperwork and transactions. This is where a lot of fraud can occur. Have a team working along the chain including opening mail, accounting, billing, and check depositing. Separating these duties keeps people accountable because they can’t control the entire flow of money.
4. Protect Against Frauds
In the event that fraud is detected, you must immediately respond to it. You can use experienced corporate investigation services to help. This sets the tone in the office and shows employees that you are serious. Having consequences is a great deterrent. Follow up to see where the fraud occurred and how to” fill that hole.” You don’t want it to happen again so implement a safeguard to protect your company.
Fraud is complicated and hard to detect. It happens in big and small businesses and you have to do your best to prevent it. By implementing these 10 strategies into your business, you can reduce the chance of fraud in your company.
5. Identify Vulnerabilities
Get into the mind of a fraudster and look for weak points in your business armour. Test your systems to see how effective they are at reducing your risk. Make sure you and your staff regularly review those systems and procedures to keep you as secure as possible. Wherever necessary, bolster up your protection in key areas so scammers can’t take advantage of you and your company.
6. Develop An Action Plan
No one wants to be scammed. Fraudsters are out there and you need all the help you can get. If all your safeguards still aren’t preventing fraud you should seek outside professional help. Hiring a professional accountant is beneficial because they can do a more detailed review and audit of your operation.
If there are discrepancies in your books they can help track it to the source. Also, a private investigator will do the investigative work that you can’t. They have the tools to collect evidence of any misconduct or misuse and know the law.
7. Secure Your Computer Systems
We live in the digital era and commerce is done on computers. Learn how to safeguard your system. Having a strong firewall will protect your data and using robust anti-virus software can stop attacks from outside hackers. Make sure all employees use passwords to gain access to your system and change them frequently. Regularly back up files and have storage off the premises.
8. Secure Your Building
Consider having a key-card system installed to prevent unwanted visitors from entering your business. It may sound extreme, but knowing who is entering and exiting the office and at what time gives you valuable information. You can even limit access to sensitive areas inside your business.
9. Understand Types Of Frauds
Be aware of what could happen in your business before it happens. There are several types of fraud schemes that could affect your business so know what to look for. They could be:
- Invoice Fraud
- Payroll Fraud
- Tax Fraud
- Insurance Fraud
- Banking Fraud
- Return Fraud
- Financial Statement Fraud
When you know what to look for, it’s easy to spot.
10. Create Fraud Policies
Have a business environment that is informed about fraud and your company policy on it. Make it comprehensive and post it around the office as well as included in company newsletters. Encourage employees to report any suspicious actives they witness and have an effective way of reporting it.
Set up an anonymous hotline so people can give information without coming forward in person. By creating a culture that rewards honesty and swiftly deals with fraud, you will have a more honest workplace.