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Don't be tricked; 8 ways to prevent fraud in your business

Don't be tricked; 8 ways to prevent fraud in your business

October 29, 2021
Deborah Edwards

I'm just going to come out with it. I have never seen so much fraud and attempted fraud in my  twenty year career as I have in the last eighteen months. It doesn't matter if you are big, small or growing, methods of getting access to your hard earned cash are becoming increasingly sophisticated, there are preventative measures that you can take to make sure that you don't become the next victim. 

Keep a close eye on the money

Regularly check into your physical bank account. Look at the statements. Scan for anything unusual, unexpected or irregular and don't dismiss anything as being "too small". Fraudsters often try the luck by starting with small, indistinguishable amounts that people will gloss over... and slowly increase the volume and size of the transactions. These are often incurred through debit card fraud. If you suspect your card has been misused, speak to your bank and cancel it immediately.

Protect your business credit card details

I've seen it so many times. Credit card details passed around for others to make online purchases. Carelessly left around details can end up in the wrong hands or be used in other ways without your knowledge and control. Don't pass around details, make payments yourself. If you have another trusted employee, apply for a business card in their own name and they are fully accountable for all transactions made with that card. Charge cards can also restrict amounts spent.

Have strong system and procedures

Fraudsters attack where systems and procedures are weak. No matter how small your company is, implement a correct procedure for making payments. Don't make payments whilst you are in a rush and especially not if you are under pressure. Setting up procedures now establishes good practice for when you scale.

Separate roles and responsibilities where possible

In small businesses, often one person can undertake many responsibilities and this is often when fraud occurs. A trusted team member is responsible for inputting purchase invoices and then also responsible for paying them. Separate these jobs out if you can, or undertake the payments yourself. Consider who has access to what areas of the financial operations and bank access. Multi-person sign off is a good discipline and is also useful when individuals are given budgets to manage.

Train your team members

There are lots of courses, webinars and even online articles to help team members recognise and therefore prevent fraud in your business. One of the most common attempts that I have come across is email requests requesting payments to be made from their own employer. Obliging employees duly make payments only to find out that the email and bank details contained within are actually from a bogus account, disguised by the employers email address. Make sure your team know about these sort of efforts and write a procedure that means payments can not be made from these requests. If they aren't sure about anything, always follow up with a verbal / face to face confirmation. Better to be safe than sorry.

Recruit wisely

Sadly, much business fraud is internal and occurs where cash is stolen or false invoices are created and paid. It is critical that the people that you engage, whether as subcontractors or employees are trustworthy. No matter how tempting it is to engage them in an informal and friendly way, follow a formal process. Interview and ask for references from previous employers or customers. If something doesn't feel right, trust your gut.

Risk assess

Take a look at your business. What areas are you potentially vulnerable to fraud? As you grow, how might this change? And both now and in the future, what can you do to stay on the safe side?

And finally

Fraud can occur in the form of giving customers product and service that they never intended to pay for. Establish details of all customers, such as names and addresses, for anyone who doesn't pay immediately. You don't have to give credit. You can credit check or ask for payment in advance. You don't have to service every customer. It's ok to say no. Remember, your business, your rules.

If you are a victim of fraud, there are different places to go for help although I will say that because fraud is rife, frustratingly you won't always be heard. Actionfraud is an organisation to support victims of fraud but sometimes it can feel like dropping information into a black hole. The Police of course is a good port of call but again, depending on the size of the fraud, you may or may not have any meaningful outcome. If you are a victim of bank account, your bank will certainly have a process to go through and in many circumstances, will refund the monies lost. If you consider all of the above pointers, your chances of being a victim are reduced.