6 fraud prevention strategies your business should implement right now

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Small Business Trends reports that around 50% of companies think they’re not successful enough, fraud to target them. Complacency is one of the most dangerous behaviors company managers have, and this makes their ventures vulnerable to theft.

Surprisingly, small companies are more defenseless than large ventures, to business and employee fraud. Small businesses are confident their employees don’t steal from them because they hire people they fully trust, but even the most vetted business manager cannot predict human behavior. 1 in 4 small companies dealt with fraud in 2017, so business owners need to understand this factor can extend past their immediate surroundings. 

Why are small businesses more vulnerable to theft than large ones? Because employees have a close relationship, the same specialist performs multiple tasks, employees have to respect fewer formal procedures, and they lack financial expertise.

Businesses can deal with three main types of fraud: asset misuse, financial statement fraud, and theft.

Here are 6 strategies that can help you prevent and detect fraud. 

1. Get to know your staff

Closely supervise your staff because fraud crooks show common behavioral traits that show they intend to commit theft. If you observe and listen to your workers you can identify a possible fraud risk. 

The management department of the company should involve with the staff and try to know them because sometimes a change in attitude can point out to a risk. 

Sometimes fraud results from a lack of employee appreciation, and if you identify the issues your employees are dealing with, you can prevent theft. When employees are angry with their job or managers, they are more likely to commit fraud to revenge. 

An attitude change should tell you it’s the moment to pay more attention to a certain worker because it not only prevents fraud but it also helps you create a happier workplace for your team. 

It surprises small business owners to find out the people they least expect commits the crime. So, it’s crucial to know their staff and regularly engage them in discussions. 

2. Separate accounting tasks

Small companies often hire a single person to handle all bookkeeping functions, like paying invoices, processing client payments, managing cash and recording the functions in the accounting software. Because the same person does everything, it’s easy for the business owner to miss fraud. 

All businesses, regardless of their size should hire at least two experts to complete these tasks separately. Another solution is to hire a third-party company to handle the accounting and cash functions of the business. 

3. Set up a fraud risk policy

All your employees should be aware of the consequences associated with the fraud. Set up a fraud policy to inform your employees about the types of theft and their consequences. If someone intends to commit fraud, the policy will warn them the management is supervising and hopefully this will deter them. 

Honest employees are always a valuable asset for a company because they can help in the fight against fraud. Over 40% of occupational fraud is identified thanks to information someone offers. Friends or family of the trickster, competitors, vendors, clients, and other employees can offer tips on someone’s criminal behavior. 

Most people are hesitant to talk to their employers about possible fraudsters, and they find it easier to report cases through an anonymous system. Implement a reporting system and facilitate your employees’ access to it, by keeping their identity safe.  

Recommend your employees to hire a professional criminal defense attorney Utah if one of their co-workers accuses them of fraud because sometimes ill intentions make people accuse each other of crimes they never did. Until proven guilty all your employees are innocent, and it’s advisable to hire an expert to protect their reputation. It’s important to keep your employees’ reputation clean to ensure your brand is trusted. By proving they didn’t steal they make your company more credible to clients, buyers and partners. 

4. Operate regular internal controls

Internal controls can take various forms from accounting recording plans to recording systems. The purpose of internal controls is to ensure the integrity of your financial records and to prevent and identify theft. Segregation of tasks is an essential part of internal control because it lowers the risk of theft from occurring. 

If you are running a store, then you need to hire a salesperson, a cash register worker and a manager. Someone tallies the money receipts, someone else prepares the deposit slip, and a third person heads to the bank. This strategy can help you identify miscalculations. 

Another way to prevent fraud is to regularly and closely check the documentation. Ask your employees to register the sales receipts in a book and look up at the paperwork weekly. Also, ensure all invoices are numbered consecutively, this way you’ll identify if one receipt wasn’t deposited into the bank.

5. Hire fraud deterring specialists

If you want to establish fraud policies, but you don’t know where to start you can hire a team of fraud examiners, certified accountants and financial forensics to analyze your company’s financial situation, and to help you create procedures that prevent and detect fraud. Only a team of experts can tell you how to perform internal control audits and how to find out if one of your employees steals from you. 

6. Promote a healthy corporate culture

The best way to prevent employee fraud is to create a positive work environment. You should establish a clear organizational structure, written regulations and procedures, and fair employment policies. This way everyone is happy with work conditions. 

If you implement an open-door policy and a fraud prevention system you show your staff you are willing to openly communicate with them. 

The management of the business should lead by example and hold everyone accountable for their actions, no matter what their position is.

It’s crucial to prevent fraud because it can cause great financial loss, legal problems and a ruined reputation. The above strategies can help you prevent theft, so you should decide which one better fits your company’s culture.