Statistics show that 31.8% of all fraud cases reported are connected to small businesses. Half of these businesses are never compensated for their losses. The reason why small businesses are highly vulnerable to fraud is because they hold minimal resources to deal with such situations effectively. Here are 10 tips that can help keep small businesses safe from fraud.
Perform Employee Background Checks
Before hiring someone new, it is important that you conduct a thorough background check on them. Other than education and professional background, you need to know whom you are employing in and out. This will help prevent cases of theft and misuse of assets within the organization.
Employees are highly vulnerable to fraud. However, if well trained, this can turn around to be the biggest defense point for small businesses. Invest in training programs that teach your employees on various security threats that face small businesses and what they can do to prevent them. Also, ensure that they understand how to handle the company’s confidential documents.
Authentication And Authorization
Authentication and authorization are security measures which ensure that information is only accessed by the intended parties. Ensure that you have strong passwords and that they are regularly changed.
Although having insurance is not a preventative measure, it will help you rise back up after you have been hit by fraud.
Drawing A Policy
Small businesses should ensure that they have a policy regulating fraud cases. The policy should be read both by officials and subordinate staff. It should clearly stipulate for action to be taken in case fraud is identified.
This is one of the most effective ways of preventing internal fraud. Having a third neutral party audit your employees will not only help in identifying resource misuse and theft. Rather, it will deter employees from conducting fraudulent activities for fear of being caught.
Monitoring your employees as well as the company activities is one step towards preventing fraud in small businesses. Have your records updated on a regular basis. Also, ensure that your inventory controls are adjusted each and every time stock moves.
Enhancing The Integrity Of Small Business Systems
Small businesses can avoid fraud by upgrading their system’s integrity. Get the best antivirus to protect your devices from malware. Aside from the added protection, this helps you resume work faster if hacked.
Know Your Vendors
Know your vendors well before you transact with them. Search them up online and also ask around to see what people have to say about them. Also, if transacting with them for the first time, ensure that a secure payment method, such as credit card, is used.
Check For Behavior Change
If an employee tries to avoid meeting you, there could be something fishy going on.
Small businesses should understand that fraud can arise internally or externally. Hence, as they try to prevent external fraud, they should also take caution to ensure that their employees do not contribute to their fraud in the company.