As a business owner, whether operating on a small or large scale, it is important to understand the indications of fraud in order for the business to run effectively.
Internal Fraud
Theft by employees is a common source of fraud. This theft can take many forms – from lost inventory to cash theft practices.
External Fraud
Externally, the potential sources of fraud are much wider. Moreover, the business being run is the internet, so customer fraud will come in the form of “orders never arrived”, “damaged goods”, and get refunds but never return products.
How to Protect Your Business from Scams
Educate Yourself and Your Employees
Relying on common passwords, using the same password for all logins and keeping a password list on or on a nearby computer makes it all too easy for fraudsters to steal sensitive information about your business and your employees. The first step in protecting yourself from this basic form of information theft is to educate yourself and your employees about creating secure passwords, how often someone should change passwords, and how to keep them safe.
Implement Clear Policies business
Without clear policies around fraud and theft, employees may not realize what impact their actions have on your business – or what the consequences will be for them if caught. Especially for a business that has a culture of “borrowing” office equipment. Whether it’s as simple as borrowing a pen to bringing home an office laptop. In this policy and procedures manual, you need to clearly outline your expectations regarding employee behavior, what constitutes “fraud” and “theft”, and what the consequences are for violating this policy. So policy setting should cover everything from the theft of physical assets from your business to no less dangerous accounting practices.
Do checks and balances
Fraud doesn’t just come from external sources. It is also important to keep an eye on your internal systems. Don’t let the same thing happen, such as the Illinois city fraud case, where a treasurer and financial supervisor embezzled tens of millions of dollars. He can avoid detection by accounting firms and regulators because many points of authority are in his office. Without checks and balances to stop him, he can create fraudulent accounts to siphon money. And, he used it to his heart’s content for years. So, one of the best ways to avoid this is to create checks and balances by dividing financial responsibilities.
Use Insurance business
If despite your best efforts, your business falls victim to fraud, insurance can help you recover some or all of your losses. To ensure that you purchase the appropriate coverage, we recommend that you consult with an insurance specialist so that they can help you evaluate all possible risks and what type of insurance will best suit your business.
