Shining the Spotlight on Business Fraud
The Association of Certified Fraud Examiners 2014 Report to the Nations states that “survey participants estimated that a typical organization loses 5% of revenues each year to fraud. When applied to the 2013 estimated Gross World Product, the result is a projected global fraud loss of nearly $3.7 trillion.” Read on to discover why you need to pay attention to fraud and learn the five types of fraud that can ruin your business. Stop business fraud in its tracks now!
Why You Need to Pay Attention to Business Fraud
Fraud doesn’t discriminate. If you have a small business, you’re susceptible to fraudulent activities. The worst part is that most business fraud is committed by those closest to you, e.g., employees and business partners. If you’re not careful, you may lose your business and possibly your home; life savings, and more. While you may not want to look at those around you with accusatory eyes, you don’t want to stick your head in the sand and become oblivious to potential business fraud.
5 Types of Fraud that Could Ruin Your Business
1. Financial fraud.
Want to avoid financial fraud? Hire an amazing bookkeeper or forensic accountant, reconcile your bank accounts, monitor credit card transactions, and have more than one check signer. Why? Because your bookkeeper or accountant can easily write double the amount of checks. For example, if your business owes XYZ Corporation $1,000, your bookkeeper or accountant may write themselves a check for $250. If this happens over a long period of time, your business may lose thousands of dollars. Your bookkeeper or accountant can skip town and live comfortably for many years in another country. Therefore, it pays to hire the right person to handle your business’s accounting.
2. Internet fraud.
The internet has changed the way you do business. You may purchase products and services online and your clients and customers may purchase from you too. Avoid internet fraud by having your website
built by a reputable company, one that adheres to the highest internet security standards. For example, you’ll want a SSL (secure sockets layer) encryption installed. Pay for shopping cart services from Shopify, BigCommerce, or Volusion. Prices range from $20 to hundreds of dollars each month. Stop hackers before they get a chance to commit business fraud.
3. Business relationship fraud.
Think twice before you hire or partner with someone who is a family member, friend, friend of the family, network associate, etc. Hire based on qualifications and talent. And remember, you pay for what you get. Make sure you pay employees well and build a corporate culture around trust, accountability, and whatever else you and your business stand for.
4. Office supplies fraud.
Does your office manager or bookkeeper order office supplies? You may be surprised to find out that he or she is ordering an abundance of supplies and returning them in exchange for a gift card. If all of the money on a gift card isn’t used, your office manager or bookkeeper may receive the remaining balance in cash. Take inventory of your office supplies and check vendor invoices to make sure you haven’t ordered more paper clips than you need.
5. Payroll fraud.
If you don’t pay attention to payroll, you may pay your employees more money that what was agreed upon at their time of hire. To avoid payroll fraud, reconcile all balance sheet accounts and payroll records monthly or quarterly. Review transactions for discrepancies and investigate until you resolve any payroll issues.
Don’t be a Victim of Fraud
Fraud happens to businesses and individuals around the globe. But, you can thwart fraudsters by purchasing the right insurance for you and your business. Fraud protection can shield you against any losses you or your business may incur. Your banks and credit card companies will help you out if business accounts are compromised.