Home / Business Tips / How to Prevent Business Fraud

How to Prevent Business Fraud

Business FraudUnfortunately in today’s business world, the risk of fraud exists no matter how hard you try to ignore it. And, in fact, ignoring the possibility of fraud makes it more likely that the consequences will strike your company hard. It is dangerous to be complacent and believe it’ll never happen to you, or that there are more profitable targets for a fraudster to hit. Preventing fraud should be a priority and luckily it is not difficult or expensive to fraud-proof your company. You may not be able to avoid all incidences of fraud by doing these things, but you can at least make it harder for criminals to take money and cause problems for your business.

1. Lead From the Top
You need to set a good example to your staff in all things anti-fraud. It is surprising how many business owners still have a blasé attitude towards fraud and financial crime – some people even view it as kind of a joke. For example, you as the boss decide to get a good deal on supplies by paying in cash when you and your staff know that the supplier will not be declaring this income. It paves the way for staff to consider that it is OK to “fiddle” the expenses or do the same with their own supplier contact. A little money-saving between business friends becomes more serious when the same attitude is taken to your company car policy, for instance.

2. Refine Your Anti-Fraud Policy
It may seem unnecessary to have an anti-fraud policy – everyone knows fraud is bad, and that it should be avoided, don’t they? But an anti-fraud policy can be more than a document no one ever opens. The point of a fraud policy is to make it clear that fraud is fraud, whether the amount of money concerns a meal in a restaurant or a flight to the Bahamas. The message needs to be communicated to staff that there are consequences to fraud and it will not be tolerated.

3. Put Effective Controls in Place
According to frenkels.com, many businesses do not have sufficient security measures in place to protect against fraud. You need controls in place such as a two-signature system to add a new supplier to the roster, or approval from senior management for supplier bill payments. If you don’t put controls in place then a criminal will find it easy to recruit someone in your organization in order to put in false invoices and get paid. If the amounts are small the fraud can go on for years and cost thousands before anyone even notices.

4. Keep Your Eyes Open
No one is telling you to be paranoid but it pays to be alert at all times. Fraudsters are constantly evolving their tactics to make money from businesses. It helps when you are prepared to acknowledge that fraud can happen to you, and then you need to be aware of any irregularities so you can investigate them before they become a major problem. And it goes without saying that the penalties for committing fraud must be harsh – if people in your company commit fraud you must go through the proper channels to prosecute.

About Josh

Check Also

What the brokerpreneur is

Maybe some of us still have not heard of this new term “brokerpreneur”. Actually the ...

Leave a Reply

Your email address will not be published. Required fields are marked *