There are various business fraud prevention strategies for protection. The average business looses 5% of its annual revenue due to fraud. Typically, fraud is committed through theft, financial statements and asset misuse. In fact, small businesses are more likely to have a higher fraud rate and suffer a greater loss than larger businesses. As a business owner, you should be familiar with the latest fraud tactics and ways to avoid them. Here are the top business fraud prevention strategies for protection.
Maintain Internal Controls
First, maintain internal controls to prevent business fraud. Internal controls are programs implemented to secure assets, ensure integrity and detect fraud. Frequently monitor and reconcile your accounting records. Review documentation daily by verifying all receipts, checks, invoices and electronic signatures to ensure there are no discrepancies. Additionally, hire a professional to analyze your current policies and procedures. Use the analysis to make appropriate adjustments and revisions to improve fraud prevention. Surely, you should maintain internal controls to prevent business fraud.
Protect Account Information
Second, protect account information for your bank and credit cards. Open separate accounts for your personal and business use to prevent business fraud. This will add a additional layer of protection since hackers can not access all of your information. Your business and personal account should have comprehensive security features such as automatic logout and instant alerts. More so, you can implement a reimbursement policy to avoid issues with employment use of company credit cards. Furthermore, consider online banking to keep your account information secure. Of course, protect account information for your bank and credit cards.
Perform Routine Background Checks
Next, perform routine background checks to prevent business fraud. Conduct a thorough background check at the beginning of employment to verify your new employees are trustworthy. Of course, you don’t want to deal with a stalker who wants to impact your operations. Additionally, perform regular background checks for all employees who handle cash, manage payments and supervise account information. Since these reports only cost $30-$50 per search, this activity can save the business significant losses. Continue to perform background checks for employees who continue to increase their level of interaction with finances. Certainly, perform routine background checks to prevent business fraud.
Divide Account Duties
Then, divide account duties among your employees to prevent business fraud. Avoid allowing one employee to have unrestricted access to all of the financial activity. Your business will be more vulnerable to fraud if you depend on one employee to handle all finances. Separate your financial duties, such as processing payments, making deposits and paying invoices. In fact, having control over one activity for a long period of time can increase the ability of the employee to commit fraud. Additionally, you can rotate financial responsibilities frequently to assure there is as little room for fraud as possible. Of course, divide account duties among your employees to prevent business fraud.
Frequently Audit High Risk Areas
Last, frequently audit high risk areas to prevent business fraud. Conduct routine audits in areas that are dealt with often by your employees. High traffic areas include cash, refunds, product returns and inventory management. Randomly schedule your audits to increase your chances of finding fraud. Audit your employees in all areas whether they are actively working or not. Additionally, audit performances can allow you to assess the fraud prevention processes you have implemented. Surely, frequently audit high risk areas to prevent business fraud.
There are various business fraud prevention strategies for protection. Protect your business as you first did when you created your successful business idea. First, maintain internal controls to secure assets, ensure integrity and detect fraud within your business. Second, protect account information for your bank and credit cards to assure fraud prevention. Next, perform routine background checks to assure all of your employees are being honest and not committing fraud. Then, divide account duties to assure no individual has full control over one function. Last, frequently audit high risk areas to allow yourself to catch fraud early. These are five business fraud prevention strategies for protection.