*Ten ways how to prevent fraud in business
When building a business, you must trust people. People will always try to take advantage of you using your weak areas, so you must take extra care in recruiting trusted vendors. It is fair enough that you concentrate on the growth of your business but do not neglect the weaker areas to open to outsiders before making the protection. So, you must be assertive in safeguarding yourself from fraudsters. Fortunately, you can do things to protect yourself and your enterprise.
Here are ten methods to prevent fraud in business:
- You must know your business well.
Understanding your business is not difficult, as you are the one who is doing everything to set it up.
You must know your products and services well to protect them from fraudsters; I am an online course creator and always make sure not to leave it open for others to copy. Sometimes, I wonder whether I am spoiling my opportunity to find new buyers by overprotecting it. You are not then using the proper advertising methods to protect any business. So, ensure that standards and protocols are implemented when running the business.
When you have employees, it is up to you to train them in the right direction, and if you notice any discrepancy, you need to take immediate action to resolve that.
- Know Your Employees
Knowing your employees is a crucial strategy for preventing fraud in the business. You cannot leave your staff to do everything without getting involved, and they, too, must know your smartness and knowledge. It consists of hiring the team for you by following the correct procedure, so when you plan to hire staff, prepare the job description and the other requirements for the job in advance, and do not ever show them any weakness in you. Every person applying for a position that handles cash manages customer payments or uses bank account information should undergo a thorough background check. If you do not have enough bookkeeping knowledge, believe in outsourcing your bookkeeping and payroll if you suspect fraud.
- Separate Duties
It would help if you didn’t have one employee handling all the financial paperwork and transactions. You need different employees for all other tasks like cash collection, recording, and bill payments; if you cannot afford that, you must get involved in that type of duty, which is vital because that can quickly destroy your business. Separating these duties keeps people accountable because they can’t control the entire money flow.
- Protect Against Fraud
If you happen to encounter dishonesty in some areas of your business, respond quickly. If you think the situation is serious, you can use another professional organization in fraud detection to help you resolve it as soon as possible. This will ensure that the other workers around you understand your seriousness about your business. You must separate the duties and employ at least two additional staff members to manage and record the transactions to control the money.
Fraud could happen, whether your business is small or large, and it isn’t easy to detect. It becomes difficult unless you implement rigorous methods to perform the essential tasks. So, if you suspect a problem, take immediate action and follow steps to prevent repetition. Fraud is difficult to find in some instances, either in a small or big business. And you must do your best to prevent it. By implementing these ten ways into your business, you can reduce the chance of fraud in your company.
- Identify Weaknesses
When you set up your business, put yourself in the fraudster’s position to try to find the weaker areas and block them in advance so that nobody can mess around with them.
You must test the effectiveness of your systems and ensure that they can reduce the risk of fraudulent activities. Please do not leave it at the setup stage; reviewing it and setting proper methods will cost you minor damage.
Strengthen your protection in critical areas wherever necessary, so scammers can’t take advantage of you and your company.
- Develop a Procedure to protect.
Dishonesty can occur when you do not have a proper accounting system for your business. The methods you enforce may not always work, so it is better to implement internal control procedures. You must find an accountant to check the present method for recording your transactions, cash collections, and balancing. The accountant will help you implement proper accounting methods to enforce there. That enables you to prevent fraud and become accessible to pass on when you outsource your work so that they can produce accurate reports for your business.
After enforcing internal control, the staff will find it easy to do the work without more complications and differences; the outsourcing company can easily detect that for you.
- Secure Your Computer Systems
We live in the digital era and do commerce on computers. Learn how to safeguard your system. A strong firewall will protect your data, and robust anti-virus software can stop attacks by outside hackers. Ensure all employees use passwords to gain access to your system and change them frequently. Regularly back up files and have storage off the premises.
- Secure Your Building
Consider installing a key-card system to prevent unwanted visitors from entering your business. It may sound extreme, but knowing who enters and exits the office and when gives you valuable information. You can even limit access to sensitive areas inside your business.
- Understand Types of Fraud
Knowing the possibility of fraudulent activities in advance is better as that is the best way to prevent your business from being harmed. People could use these areas to try their best to be dishonest in their performances.
- Invoice Fraud
- Payroll Fraud
- Tax Fraud
- Insurance Fraud
- Banking Fraud
- Return Fraud
- Financial Statement Fraud
- Credit sales collections
When you know what to look for, it’s easy to spot.
- Create Fraud Policies
Inform the business environment about fraud and your company policy on it. Write your business plan and include this policy, too. Make it comprehensive, post it around the office, and include it in company newsletters. Persuade employees to report any suspicious activities they witness and have an effective way of writing them.
Set up an anonymous hotline to give information without coming forward in person. Creating a culture that rewards honesty and swiftly deals with fraud will create a more honest workplace. Some companies pay bonuses for increased sales on some days, making them happy and showing more faith in the owner.