The world isn’t necessarily a fair place: people lie, steal, and cheat every day to get themselves ahead. Fraud is one of biggest ways they can achieve this — whether internal or external, people pretend to be someone they aren’t and gain access to funds that aren’t theirs. Small businesses are especially vulnerable to such attacks, and can lose far more in the long run. Considering the fact that small businesses (defined as having less than 500 employees) make up around 99.7% of all businesses in the US, it’s vital that their owners learn how to protect their investments from fraud.
Since small businesses tend to rely on a single employee to perform multiple roles, including those that involve sensitive personal and financial information, it can seem almost impossible to safeguard your company from determined fraudsters. The fact that in 2017, banking and credit companies account for 8.5% of all data breach victims can make matters even more daunting. A recent article published on the CNBC site broke it down simply: trust, but verify.
“You can give people trust in the business, but you should be verifying what’s going on in your business. Take that extra little bit of time and look at the bank statements that come into your business, look at the financial documents,” stated Bruce Dubinsky, a managing partner and certified fraud examiner at Duff and Phelps.
It seems obvious, but can be difficult to implement and commit to; if you don’t know anything about balancing your books, it might seem easier to just let one single chief financial officer handle all the work — Dubinsky insists it’s worth the effort to learn the basics so you can review it afterward. Take the time to understand the details of your company’s finances, and consider having bank statement sent directly to your home or email account; when they arrive, carefully inspect their details for anything that looks out of the ordinary.
Additionally, installing controls in your business is a good way to check the power of each individual employee. Big companies segregate responsibilities so no one person has too much control or can make too many big changes on their own.
“It’s probably one thing I tell business owners: ‘Never allow a bookkeeper direct access to your bank account,'” Dubinsky said, including the ability to add or delete payees online.
Small companies lose more than $7 billion due to fraud every year. Be smart and make sure you’re paying close attention to the actions of your employees, especially if they have direct access to personal or financial information.
Photo Credit: stock photo