Four Ways to Prevent Fraud in Your Small Business

fraud

Setting up your own small business is an exciting experience, but unfortunately, everything that you’ve worked so hard for can be lost overnight to business fraud if you don’t take the right preventative measures to keep your company safe. In fact, small businesses are the most vulnerable to occupational fraud and abuse, making it even more important that you don’t take any chances. Although no business owner will want to feel that they employ dishonest and fraudulent people, sometimes even the most trusted employees can be pushed into committing fraud through financial difficulties or temptation. So, how do you protect the business that you’ve worked so hard to build from fraud? Here are some priority precautions that you should be taking.

#1. Hire the Right People:

First and foremost, hiring the right employees is the best way to keep your business’s risk of suffering fraud at the hand of a worker to a minimum. While you can never be one hundred percent sure that your new employee won’t end up committing fraud, you can certainly be thorough when it comes taking on new hires and check for anything that is suspicious. Conduct background checks for anybody whose tasks will involve handling money and inventory, check past employment records, references, any education and certifications, and perform criminal background checks. Many small business owners also conduct drug screening tests, since employees may steal from a business to fund an addiction.

#2. Use Digital Forensics:

Whether you suspect fraud or not, digital forensics is a very useful tool for finding out exactly what is going on in your business. It can help you to prove any suspicions of fraudulent activity that you already have, or it can simply be used to conduct regular checks. Using digital forensics services from Secure Forensics, you can identify any files on employee computers, laptops and smartphones that shouldn’t be there, have been accessed without authorization, or have been moved onto an external drive.

#3. Monitor Cash Situations:

If you own a business where employees are dealing with the physical handling of cash on a regular basis, then these situations should be closely monitored. For example, if you own a retail store, it’s a wise idea to invest in cameras to monitor any activity at cash registers and in storage areas where any inventory is kept. And, track all cash coming in and out of the registers so that you can compare the expected numbers to those counted at the end of the day. In general, people are less likely to steal from a business or commit acts of fraud if they know that their activity is being watched and monitored.

#4. Conduct Regular Surprise Audits:

Often, catching somebody off-guard is the best way to discover fraud in your business. The key here is that an employee who is committing fraudulent activity won’t know what’s coming, and therefore won’t have time to change records or cover up the fraud in another way. Surprise audits can uncover situations such as duplicate invoice amounts or numbers, both of which can be red flags for possible criminal activity.

How do you prevent fraud in your small business? We’d love to hear from you in the comments.

About Carson Derrow

My name is Carson Derrow I'm an entrepreneur, professional blogger, and marketer from Arkansas. I've been writing for startups and small businesses since 2012. I share the latest business news, tools, resources, and marketing tips to help startups and small businesses to grow their business.

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