Any business can become a victim of business fraud, and this makes it important for every single business to take measures that will help them protect their finance and avoid becoming a victim. Fraud is in a state of constant evolution, and this means that new scams are coming into being every single day. Keep reading to see some tips that you can follow so that you avoid potential business fraud.
Know Your Business Perfectly
The first tip that can help you take care of your business finance by avoiding fraud is to know your business perfectly. If you can find out the detailed workings of your business, you’re going to have an easier time noticing if anything is out of place. This begins with knowing your employees well and making sure that you hire the right experts who are skilled and trustworthy. To this end, perform background checks, especially on employees who are going to be handling finances and other sensitive aspects of your business. The steps you take to do this are well worth the cost because, according to the Association of Certified Fraud Examiners or ACFE, businesses lose around 5% of their revenue to fraud every single year.
Identify Risk Areas in Your Business
Next, knowing the workings of your business well should make it easier for you to identify risk areas. Do this by thinking critically to see if you can come up with ways in which a fraudster could target your business. If not, hire an expert to help you do this, which would be great if they have experience with businesses in your industry. Test both new and old systems to find out if they work, or if they need to be improved in any way, reviewing them frequently. You should also understand the law as concerns your business and learn facts such as that business owners can contribute up to 25% of the compensation of an eligible employee, according to a SEP IRA.
Teach Your Team About Fraud
Next, keep in mind that your business is only going to be safe if your employees understand fraud and the defense that they can take against it. This is the reason why you ought to invest in employee training so that you can be on the same page as each employee in terms of fraud and how to handle it. This way, everyone on your team should know what behavior is acceptable and which isn’t, including the protocol concerning office devices. You could also call professionals to share information on safety as far as fraud goes, and the consequences that these can lead to in general. In such a case, you may end up learning that 11.5% of federal civil cases in 1962 went to trial, while experts today say that this percentage has gone down to approximately 1%.
Come Up with an Action Plan
Finally, it pays to be prepared because you’re going to know the best way in which to proceed if something were to happen. This means that it’s a great idea for you to know when you might be in need of legal or professional advice and put a plan for this in place. Find out where to report fraud if it does happen so that you can act fast in case you need to file a report, which can help you get compensation if you’re due for it.
By following these tips carefully, you can improve your chances of avoiding becoming a victim of fraud. Remember that it’s a constant process that you should stay informed on throughout because, as mentioned, new scams are coming up every single day. Small to medium businesses are at the highest risk of fraud, so it’s best for you to take extra care if yours is one, and you’ll be happy that you did so.