Combatting fraud is a key issue for businesses

Fraud can be a major issue for many businesses in today’s climate and according to recent figures from the Credit Industry Fraud Avoidance System (CIFAS), in the UK alone there has been an 18% rise in the number of staff frauds recorded in 2013, compared with 2012. Fraud can occur for a number of reasons and there are ways that it can be avoided and some vital clues to look out for.

Whilst we often hear about fraud in relation to large corporate entities, that doesn’t mean it can’t happen in smaller businesses too. Where small businesses have smaller teams, which in theory one would imagine are easier to keep watch over and spot any potential fraudulent activity, in reality with less resource available, it’s sometimes more difficult to do so. Our advice would be to never assume it can’t happen in your business.

When taking on staff, businesses of all sizes should be taking extra care to check the candidate’s references out thoroughly – especially if they are likely to work in areas where fraud could be effected. Having a clear policy in place which makes clear the company’s stance on fraud will help, and effectively communicating this to existing and new employees.

The word fraud conjures up all kinds of thoughts and scenarios but doesn’t have to really be on a large scale at all. Some fraudulent activities could be considered less severe, such as overstating expenses. However, there are cases where an employee might work in collaboration with a supplier to pass fraudulent invoices or affect business tender decisions by taking a payment in exchange for choosing that supplier. This could turn out to be the wrong decision for the business. Some employees also might have the opportunity to create fake supplier accounts and invoices to generate additional income. It is advisable to not have just one person responsible for finance related functions, as this opens up opportunity and makes it easier for the fraud to go undetected.

Businesses should also look to tighten procedures for checking goods and invoices to avoid being taken advantage of by suppliers who may shortchange on goods or overcharge on invoices if they see a weak system in place. It’s important to check thoroughly, and if there is any cause for concern, raise it as soon as possible to get the issue rectified.

Closing the window of opportunity for fraud is a far easier activity than rectifying the damage it can cause, so be extra vigilant, implement tight procedures and keep a close eye on accounting.