Preventing Fraud through Technology
May 30, 2019 MicroBilt News
According to the 2018 Association of Certified Fraud Examiners Report, U.S. businesses lose five percent, on average, of their revenue each year to fraud. The report goes on to say that private companies and small businesses rank highest among fraud occurrences, with 42 percent of fraud frequency compared to larger corporations and non-profits which often have better internal controls and fraud prevention tools in place.
CNBC goes on to put these numbers into dollars and cents, stating that employee crimes, such as theft and fraud, cost U.S. businesses nearly $50 billion each year with small businesses bearing the brunt of these costs, accounting for roughly 68 percent of employee theft and embezzlement instances. The two most common types of fraud perpetrated by employees, often trusted employees within the organization were funds theft, accounting for more than one-third of the cases according to CNBC followed by check fraud, ringing in at 22.1 percent of fraud occurrences.
Preventing Fraud in Your Small Business
While most small businesses lack the resources available to larger corporations there are things you can do to that will help you prevent fraud from taking place within your business.
Hire the Right Employees
Inc.com lists hiring the right person for the job as a huge priority for businesses seeking to reduce fraud risks. This involves conducting a thorough background screening not only to see if employment candidates have histories of committing fraud against employers, but also verify their qualifications, educations, experience, and certifications. Fortunately, technology makes that easier than ever, with companies like Microbilt offering customizable solutions for background checks.
Require Approval for Expenditures
While requiring approval for expenditures won’t eliminate all possibilities of check fraud and skimming, it can greatly reduce the risk by requiring that at least two people be involved in these types of activities. You can add an additional follow-up protocol by investing in accounting software that checks for anomalies.
Automate Bill Payments
This takes employees out of the equation and saves your business time and money. It’s a win for businesses that do this and can be managed with many accounting software services. The fewer hands in your accounts, the lower the risk for check fraud. Automated bill payments reduce access to business accounts and the associated risks.
Reduce Employee Access to Business Funds
Once upon a time employees had wide access to business bank accounts. It was necessary as it allowed them to do their jobs effectively. That is no longer a necessity, though, for some businesses it remains a habit. New technology and software like Bento for Business, allows you to control how much employees can spend on behalf of your business without giving them access to the full force of business funds. You can even control where employees spend company funds as well.
Small businesses today have wider access to affordable fraud prevention tools that can help you reduce your risks of fraud occurring and your level of financial exposure when it does occur. Put these practices into place to make your business safer from fraud.