3 ways to protect your business from fraud

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Fraud can be detrimental to a business of any size. Generally, most employees work hard to build and maintain the company they work for, but unfortunately, some have other ideas. It is estimated that the average business loses around 5% of its annual revenue as a result of employee fraud. However, there are things you can do to protect your business from fraud and detect it before it causes losses. Fraud occurs in numerous forms, from theft to forgeries that hide assets and corruption schemes that manifest in bribery, conflicts of interest and extortion. Here are a few things you can do to stop it in its tracks:

1. Keep an eye on your staff

Get to know your staff. Before you hire them, perform relevant background checks to ensure everything is above board. Communicate well with them and allow them to share and worries or woes with you. Often employees commit fraud because they are disgruntled and want to get back at a boss that is unappreciative or doesn’t pay them fairly for the work they do. Discussing concerns and addressing any issues will help maintain harmony in the office. Furthermore, it will encourage them to be loyal, and allow you to keep an eye on anyone acting suspiciously without drawing attention to yourself.

It is also worth monitoring the work of staff who don’t take time off work. This might sound unfair, but they might be trying to hide unscrupulous activities. This is easier if no one else shares or looks at their work. Where possible, vary the workload of your staff. This could help detect fraudulent activities, mainly because the second employee with have to check over existing work before they do their share of it.

2. Apply internal controls

It is a good idea to apply internal controls to prevent fraud and protect your business’ assets and reputation. The details of these controls will vary depending on the industry you are in, how work is distributed and what staff have access to. However, keeping books, ensuring receipts and invoices are saved. It is also important to keep a record of takings and any money deposited into the bank. It is best if this is shared between a few employees as it is easier for one person working alone to alter records of takings and hide money as they have no one to answer to.

Audit stock regularly and double checks orders to ensure they match up with what is on the shelves and what has been sold. Keep a record of any stock that is missing. Furthermore, check the addresses and details of new clients/ customers to ensure they are correct.

3. Make it easy for employees to report suspicious occurrences or behavior

Develop a fraud risk policy and include it in staff training so that potential fraudsters know they are being watched. Show employees what to look out for and make it easy for them to report any suspicious behavior. You could do this by setting up a specialist website or phone line which allows them to submit anonymous reports. If fraud is committed through your business that compromises customers, associates or clients then you could find yourself accused of fraud. If this happens, it could destroy your business’ reputation and you will need to contact a defense attorney immediately.