Businesses of all sizes are at risk from scams but small businesses are more at risk than others. Estimates place the UK economy as the victim of hundreds of billions of pounds of scam fraud each year, with a typical business losing 5% of their income every year.
Whilst larger corporations have specialised divisions set up to combat the losses of fraud, smaller businesses lack the resources to combat targeted scamming. Scams can also be detrimental to small businesses with some going out of business due to scams draining important cashflow in the early days of setting up.
Scammers become more advanced each year but there are elements of a scammers’ approach that remains the same. These are the important things you should do if you own a small business and want to avoid scams:
- Train your employees
Your staff should always be aware of the tell-tale signs of a scammer and what to do if they should suspect an enquiry, approach or proposition to be fraudulent. Always train your staff to work by proper protocol – not giving out passwords or other sensitive information via emails or anywhere where they may fall into the wrong hands.
- Be tech savvy
Scammers often pose as official agents using email addresses, caller IDs and websites that look legitimate. Make yourself and your staff aware of what you need to look out for in order to spot a scam and ensure all your own files, passwords and financial information is properly protected.
- Verify all your invoices and payments
Businesses can easily lose out to fake invoices, which can slip through the net by not being checked properly. This is why it is vitally important that you check all your invoices properly and check that any bills are for items that you actually ordered and received. Sometimes when dealing with new distributors, businesses may pay invoices before goods arrived only to realise they have been scammed once goods fail to materialise.
To release capital tied up in unpaid invoices to reinvest in security for your business, consider Merchant Cash Advances or invoice financing. The alternative lending option that small businesses are turning to in order to loan money against amounts owed to them by other companies.