- 12 Ways to Protect Your Small Business from the Threat of Frauds
- Protect Your Small Business from Fraudsters with These 12 Precautionary Tips
- How to Protect Your Small Business from Fraud. 12 Tips You Can’t Ignore.
Meta Description: Fraud is on the rise – especially among small businesses. Never has there been a greater need to take steps against fraudsters than today. Here are 12 easily implementable steps to protect your business from frauds.
According to ACFE (Association of Certified Fraud Examiners), the world’s largest anti-fraud organization, small businesses are the most common organisational fraud victims. Businesses with less than 100 employees report 28% of all types of frauds. That is a much higher rate than the frauds reported by medium and large businesses. As a result, small businesses suffer more significant losses. Small business scams are becoming more sophisticated, and scammers will go to any lengths to deceive you. Here’s a look at how you can protect your small business from different fraud.
1. Educate yourself
The first step to protecting your small business against fraud is to educate yourself about the kind of scams and fraud related to your business. The next step is to understand how you can protect your business from those frauds.
2. Educate your employees
Train your employees on ways to detect, identify, and prevent frauds. They should also know how to report suspicious behaviour by customers and co-workers. Educate your staff about common warning signs. Consider setting an anonymous reporting system that your employees can use to share information about suspicious activity.
3.Monitor your employees
As well as educating your employees, it is also essential to monitor them. Check each new hire’s references and criminal records, if any. Don’t assume that your long-serving employees are trustworthy.
4. Don’t let one employee be in charge of all the accounting and book-keeping
Manage accounting and cash-handling functions separately. Have separate employees manage operations like paying invoices, handling petty cash, recording processes in the accounting system, and processing client payments.
5. Reduce cash transactions
Internal theft is now a growing concern in retail businesses. Using cash makes it difficult for you to monitor internal thefts. Consider replacing cash transactions with digital transactions.
Cash fraud is another problem that is becoming challenging for authorities. If you accept cash in your business, consider checking the authenticity of the currency that you receive.
6.Reduce check transactions
Check frauds are another common fraud. Make it a business policy to accept checks only from customers and suppliers whom you trust.
7.Protect Your business’ credit card information
Keep your personal credit cards separate from your business credit card. By separating your accounts, you can keep track of your business expenses. Make sure you use your business credit card wisely. Ensure only you and a few employees you trust have access to your business credit card or the card number.
8. Implement clear fraud and theft policies
Without clear fraud and theft policies, your employees won’t understand the impact of their actions on your business or the ramifications of their actions if caught.
Your policies and procedures must cover all types of fraudulent accounting practices related to your business. Include clearly outlined expectations about employee conduct. State out clear what you consider as fraud and theft and the consequences for violating those policies. Ensure your policies.
9. Have a password policy
As well as implementing fraud and theft policies, have a password policy to protect your IT systems. Ensure your employees change their passwords regularly. Set rules to set complex passwords and use different passwords for different accounts (online and system accounts).
10. Keep Accurate and Detailed Records
Stay on top of your business operations so that you can shield yourself from fraudulent activities. Keep accurate records to keep track of how much money is coming in and going out of your business. Keep track of what suppliers bill you. Please keep track of what contractors charge you concerning how much work they complete.
11. Protect Your IT Infrastructure
Invest in a decent firewall as well as powerful anti-virus spyware and malware software. Consider backing up all your data so you can continue working even in the event of a cyber-attack.
12. Use a Dedicated Computer for Banking
If possible, use a single computer for all your online financial transactions. If possible, ensure you don’t use that computer for any other online activity like emailing, web-surfing, or social media. All these can open your computer to vulnerabilities. When possible, avoid mobile banking.
Conclusion
Cybercriminals are everywhere. They could be criminals who are out for money or information. They could even be your clients, who want to compromise your business information, or business competitors who wish to gain an advantage over your business. You can’t dismiss your current or former employees who might accidentally or even intentionally comprise your business information. A cyberattack can cause business or financial loss, damage your reputation, and investment loss. Consider implementing the above steps to reduce the risk of fraud. In the event of a scam, you can still seek to cover damages by investing in business insurance that protects you and your business from losses you might incur from frauds. Click here for more information.
References
Merchants Insurance Group. 2019. 7 Ways to Protect Your Small Business from Fraud and Cybercrime. [ONLINE] Available at: https://www.merchantsgroup.com/blog/7-ways-to-protect-your-small-business-from-fraud-and-cybercrime/. [Accessed 12 March 2021].
Bijlypay. 2021. Five Precautionary Measures to Prevent Fraud in Your Business. [ONLINE] Available at: https://bijlipay.co.in/blog/five-precautionary-measures-prevent-fraud-business/. [Accessed 12 March 2021].
Ace Cloud Hosting. 2019. Most Common Frauds and How Small Business Can Prevent Them. [ONLINE] Available at: https://www.acecloudhosting.com/blog/prevent-frauds-in-small-business/. [Accessed 12 March 2021].
SBBC. 2021. How to Protect Your Small Business from Fraud. [ONLINE] Available at: https://smallbusinessbc.ca/article/how-protect-your-small-business-fraud/. [Accessed 12 March 2021].
Australian Competition & Consumer Commission. 2021. Avoiding Scams. [ONLINE] Available at: https://www.accc.gov.au/business/business-rights-protections/avoiding-scams#why-are-small-businesses-at-risk-of-being-scammed-. [Accessed 12 March 2021].
Westpac. 2021. How to Help Protect Your Business from the Threat of E-Fraud. [ONLINE] Available at: https://www.westpac.com.au/business-banking/business-help/run-business/protect-business-efraud/. [Accessed 12 March 2021].
