One of the biggest mistakes small business owners make in relation to fraud prevention at their companies is doing nothing. They often think that fraud prevention is too extensive and too expensive, so they opt to do nothing proactive to reduce fraud. The idea that fraud prevention is too difficult or too costly is simply not true.<\/p>\n
While it is true that a full-blown fraud prevention plan at a company can be expensive to develop and implement, there are many inexpensive things small business owners can do to reduce their risks of fraud. So even if they can\u2019t afford the best or most expensive fraud prevention solutions, there are still steps they can take to improve.<\/p>\n
Here are five tips to start your company on the road to reducing fraud: 2. Educate employees about fraud<\/strong> \u2013 Employee tips about suspicious behavior are one of the most common ways that fraud is detected in companies. Since employees are often willing to provide information about irregularities in the workplace, it makes sense to educate them on the signs of fraud. Give them basic training on fraud schemes, emphasizing the most common ways fraud occurs in your industry and what they should do if they suspect fraud.<\/p>\n 3. Divide duties among employees<\/strong> \u2013 Giving one employee too much control over a function or process in your company can create opportunities for fraud. Divide tasks among two or three employees, and involve the owner of the business in the process as a \u201ccheck\u201d on the work the employees are doing. By dividing the critical tasks and having someone supervise, it makes it more difficult for an employee to steal and cover the theft.<\/p>\n For example, one employee receives customer payments and prepares the bank deposit paperwork. A second employee takes the deposit to the bank. A third employee updates customer accounts in the accounting system and reconciles the bank statement to ensure that the correct amount was actually deposited. The owner of the business examines the bank statement and the reconciliation. If an employee tries to steal money at any point in this process, another employee in a separate part of the process will likely uncover the theft.<\/p>\n 4. Enforce your code of ethics <\/strong>\u2013 It\u2019s important to have policies and procedures in place that define ethical conduct in the workplace. In addition to developing the policies that tell employees what is acceptable, it is equally important to enforce them on a regular basis. If employees are caught violating the code of ethics, those violations must be met with swift (but fair) punishment in order to send a message that fraud and dishonesty are not tolerated. A reasonable code of ethics that is enforced across the board can have an important deterrent effect, and it helps formalize management\u2019s expectations for employee behavior.<\/p>\n 5. Put yourself in the shoes of a thief<\/strong> \u2013 If you were an employee intent on stealing from a company, how would you do it? What weaknesses exist in your system that might make it easy to commit fraud? Are your employees properly supervised to help reduce fraud risks? Are there obvious opportunities for theft and fraud? It is important for the owner of a small business to be involved with operations and aware of what\u2019s going on with the employees. It\u2019s especially important to play an active role in the finance function, letting employees know that the money is being watched.<\/p>\n Simple procedures like these can significantly reduce a small company\u2019s exposure to fraud. They\u2019re not going to stop all fraud, but they will be a few important steps toward securing the company\u2019s assets and making employees aware that management is actively monitoring the money.<\/p>\n And the best thing about these procedures? They cost little to nothing to implement, so small businesses have no excuse to not give them a try.<\/p>\n","protected":false},"excerpt":{"rendered":" One of the biggest mistakes small business owners make in relation to fraud prevention at their companies is doing nothing. They often think that fraud prevention is too extensive and too expensive, so they opt to do nothing proactive to […]<\/p>\n","protected":false},"author":2,"featured_media":19619,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[2955],"tags":[],"class_list":["post-17123","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-moved"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-content\/uploads\/2020\/08\/steal-money.jpg","jetpack_shortlink":"https:\/\/wp.me\/p6Z0e-4sb","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/posts\/17123","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/comments?post=17123"}],"version-history":[{"count":2,"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/posts\/17123\/revisions"}],"predecessor-version":[{"id":22720,"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/posts\/17123\/revisions\/22720"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/media\/19619"}],"wp:attachment":[{"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/media?parent=17123"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/categories?post=17123"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/tags?post=17123"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\n1. Hire the right employees<\/strong> \u2013 It\u2019s important to hire only the best employees. Companies should create a screening process that includes thorough interviews, background checks when permissible, and verification of prior employment and references. Weeding out bad potential employees not only reduces the risk of fraud, it also reduces the amount of money spent on hiring and training employees that are wrong for your company.<\/p>\n