The ongoing battle against fraud

It is estimated that one in four small businesses are affected by fraud each year, in some form. However, it is a subject we often associate with large corporates and vast sums of money, not really ever imagining that this kind of activity could permeate our lives or businesses.

The risk of fraud is there for businesses of all shapes and sizes and can be executed in a number of ways, often going under the radar until it’s too late. Here are some tips you can follow to reduce the risk of your business being affected.

Familiarise yourself with the opportunities for fraud

Fraud can come in many forms, from over or understating expenses to make a fast buck, to being more calculated in the creation of fictitious suppliers, in combination with the production of false invoices. The outcome is always the same – a direct impact on the bottom line. Keep an eye on employees who may have the opportunity to work in collaboration with a supplier to execute such fraudulent activity.

Adequate vetting

 In smaller companies, with many roles becoming multi-faceted and many responsibilities often lying with one person, it can be easier for them to commit fraudulent activities. Adequate vetting should be a key component of recruitment, but when the role might involve access to areas of the business where the opportunity for fraud might be more prominent, special attention should be given to vetting. Good references are a must, but it is also wise to keep a close eye, or assign a co-worker to, when new employees are brought on board.

Keep an eye on external forces

Where the purchase and delivery of goods is involved, there is always the opportunity for fraud. Activities such as goods delivered not matching goods paid for, or higher amounts being billed, can go under the radar here if strong procedures aren’t in place to check. Checking all goods deliveries and delivery notes and ensuring they match the invoiced amounts is vital. This will also at as a deterrent, as suppliers who might have considered fraudulent activity can be put off by vigilant checks.

Have a clear policy

Implementing a zero tolerance fraud policy and making all staff members aware of it, communicating it across the business, is an effective preventative to fraud. If staff believe the company is switched on to fraud and consequences are clearly known, it will certainly make anyone think twice about committing fraud.

 Don’t drop your guard

 Make preventing fraud an ongoing crusade and get staff on board, so everyone is looking out. With a clear policy in place and eyes and ears all over the organisation, defences are up and opportunities minimised. This isn’t a one-hit wonder – commitment to ongoing vigilance is key. Identify areas of risk and put in processes to reduce it.

Good book keeping and management accounts should throw up any significant changes in cash flow or business performance that may highlight unusual activity. Staying on top of the finances, or even outsourcing financial functions, can identify potential issues early.

Never believe that it can’t happen to you!