Fraud Prevention Strategies For Businesses

It’s vital to save money if a business is going to survive. One stat which will shock a lot of people, then, is the 5% rule. On average, each year, companies around the world lose 5% of their revenue to employee fraud. And, that is just one type of criminal activity. When you factor in everything from customer fraud to hacking, the number gets bigger.

It isn’t just big, but huge. 5% is a significant number for any firm, let alone an SMB. So, the key is to crack down on fraud across the spectrum. That way, the business saves face and money.

To be successful, you have to understand the strategies which work and the ones which are pointless. For the people who don’t know where to start, the following advice will come in handy. Here’s what businesses need to know about limiting fraud.

Employees Steal

No one likes to admit it because it’s a difficult pill to swallow yet it’s true. Lots of workers are loyal and stand by the company through thick and thin. Sadly, some people don’t have the same morals and will take a mile if you offer than an inch. From claiming overtime they haven’t worked to clocking in “on time” when they are late, employees know all the tricks in the book. What you have to figure out is, who can you trust? Don’t let experience and a flashy smile cloud your judgement. Often, perpetrators hide behind these features to divert attention. The warning signs are things such as unhappiness or an increased workload. Petty as it is, individuals feel aggrieved and lash out to get revenge. Sitting down and communicating with a person is an excellent place to start as it gives you an insight into their mindset.

And So Do Customers

Businesses think customers can’t defraud a company because they are not on the payroll. Well, like a disgruntled employee, a consumer with an axe to grind knows the playbook, too. A great example is delivery fraud. The way it works is simple. A person orders a package, gets it delivered without a signature, and applies for a refund. When the company says the courier delivered the parcel, they create a fuss and accuse them of lying. Because the customer is always right, businesses let this behaviour slide once or twice before putting their foot down. “Once or twice” is too many times, which is why an organisation should trust its partners. At the very least, there should be a thorough electronic paper trail and an insurance policy as backup.

Hackers Target Small Businesses

First of all, hacking is a form of fraud. Bosses don’t see it this way but it’s the truth. Secondly, hackers will target SMBs and leave the big corporations alone. Again, business owners don’t think this to be true yet why would they take on a giant firm? Their security is tight, the anti-fraud people they employ better, and the vault harder to crack. On the whole, burglars are opportunists who don’t like a challenge and who build money by stealing small amounts from little businesses. To stop this behaviour, you must verify that your customers are real people first and foremost. Phishing emails are enough to get into the server and steal sensitive data and information. Then, increase cybersecurity by investing in quality antivirus software. As a rule, don’t use free versions because the features are not as encompassing.

It’s Hard To Spot

Many businesses think they are immune to fraud only to find out it has been happening for years. Usually, an individual won’t be outlandish because they want to avoid jail. So, they steal little and often to evade suspicion. Unfortunately, the company could be in trouble before it figures out what is going wrong. Therefore, it’s best to have codes of conduct in place to flush out any criminal behaviour. An internal audit is a fantastic resource as it reconciles the books and keeps the accounting team honest. Also, creating an atmosphere where employees inform the hierarchy is crucial.

Structure Is The Key

Are you a boss who trusts in people? It’s a commendable trait yet one which is potentially damaging. In truth, people can advantage of trust and use it to syphon money from the accounts. The good news is a solid corporate structure will limit the damage. When an individual has to get approval from a manager, he or she can’t play around with the company’s finances. Think of it like the mafia but without the violence!

If you are serious about being successful, you will treat fraud with respect.

Michael Foote

Michael Foote, founder of Quote Goat, has over 13 years experience working in the finance, insurance and currency sectors, gaining a financial qualification in 2010-2011. LinkedIn Profile

Fraud Prevention Strategies For Businesses