Chadrack
Fraud is a very real threat to businesses. It doesn’t matter the size of the business nor what type of business you are into.
According to a recent report released by the ACFE, (the 2014 Report to the Nations on Occupational Fraud and Abuse) organizations around the world lose an estimated 5 percent of their annual revenues to occupational fraud.
You must understand that fraud could emanate from the most unexpected places. When it happens, your revenue, reputation and the long-term health of your business could be affected.
This is why business owners need to be more vigilant to keep it at bay.
However, as much as you want to prevent fraud in your business you don’t want your efforts to put people off working with you. The good news is that there are simple but very effective ways you can start preventing fraud in your business without coming out as evil!
Here are some of my recommended ways to effectively and efficiently detect and prevent fraud in your business:
Watch Out for both Internal and External
Both internal and external fraud can be an issue for small businesses. Internal is when an employee or partner tries to steal or do something sneaky with the funds of the business. It may be one employee who is in on this, or the conspiracy of lots of them. External fraud is an outsider who perhaps attempts to use a stolen credit card or a bad cheque.
Set Your Boundaries Clearly
You don’t want to sound like a school teacher hammering out the rules, but you do need to set clear boundaries for your employees. This way, they'll know if taking a pen from the stationery cupboard home is a sackable offense. By setting your expectations out like this, everybody will be on the same page and you’ll reduce the risks of misunderstandings. A code of ethics will also help you to strengthen a case for court if you must take legal action. You must enforce anything you write down if the rules have been broken.
Set up Internal Audits and Surprise Audits
Internal audits should be regularly set up so you can monitor things like work processes, inventory, and accounting. Surprise audits will help too. If an employee knows that a surprise audit could happen at any time, this will reduce the risk of fraud.
Give a Way for Employees to Report Suspected Fraud
A method that isn’t used very often to deter fraud is giving an anonymous way for your employees to tip you off if they suspect fraud within the company. You should work hard to protect the anonymity of the people who report to you, as well as investigate to ensure that the claims are true and not the result of some petty grudge.
Deter Fraud as Best You Can
The only other thing you can do is deter fraud as best you can. Here are some examples of steps you can take to protect yourself from fraud:
- Eliminate use of employees accessing non work related sites. This will stop any of your or your customer’s data from being lost or stolen.
- Identity verification technology can help you to perform checks on customers without putting them off.
- Install video surveillance to deter thieves and people who make claims on imaginary injuries.
- Create a return policy to eliminate risk – returning goods is a huge source of fraud.
- Always perform background checks on any employee that you hire. This will make sure they are legal and not of questionable character.
Conclusion
Remember, the steps you take will all depend on the kind of business you have. Protect yourself to eliminate risks of fraud, both internal and external, and you can run your business with peace of mind. Good luck!
Image credit: picture author
