The vulnerabilities of small and medium-sized enterprises if you don’t know how to protect yourself. When you consider the various types of fraud in a business, such as theft, misuse, or financial frauds, these are bitter pills for businesses to swallow. But what does it take to preempt and deal with a form of financial business fraud?
Get expert help
Sometimes there are many implications no matter how much you have put the stops in place. Legal help such as the Spodek Law Group can always help with the fraudulent issues. When there are larger legal implications it’s important to maintain a comprehensive outlook. This could mean hiring a professional accountant to audit the books and improve the processes, or bringing in certified fraud examiners to help with detecting and prosecuting.
Have a tighter reign over internal controls
Small businesses need to maintain internal controls to detect or prevent fraud. This could include restricting access to the inventory, minimising financial account access and various payroll and accounting functions. When you incorporate more scrutiny, you have a tighter hold over the controls. You can do this by scrutinizing any online banking options through your business bank accounts. It’s important to do this on a regular basis to make sure that everything is above board, but also to make sure that any paper-based statements have not been tampered with. Business bank accounts should be checked online, and you can look for red flags, such as unknown recipients of payments, missing checks, or checks that were handed to a third party rather than the business account.
Employees should be aware of the warning signs of financial fraud. But if an employee does not know how to escalate the issue appropriately, it is vital to incorporate a strict training structure. Establishing an anonymous reporting system can help employees escalate problems, but while also keeping their minds at ease. It’s not an easy thing to report a colleague and can be a very stressful practice. It’s crucial to create a code of ethics to make everybody understand unethical behaviour is not tolerated and will be dealt with swiftly and severely.
Know your business partners
Working with another business is a crucial way to get ahead, but it involves a very deep level of trust. Knowing your business partners is not just about understanding the basics, but you could utilise additional resources to get background information on the company. If you’re sending a company an invoice after they’ve performed a service, you expect to get paid. It’s far better to understand your clients before you get into bed with them.
Understand your employees
Getting the best talent is priority number one for businesses, and while every company wants to hire honest employees, having a formal hiring routine can greatly reduce internal fraud. This will include background checks and scrutinising their past and present situations. If you are going to interest them with finances, you need to know them inherently. Many employees that commit fraud are usually found to be the nicest of all, that will do more for the business than you demand.
(Disclaimer: This content is a partnered post. This material is provided as news and general information. It should not be construed as an endorsement of any investment service. The opinions expressed are the personal views and experience of the author, and no recommendation is made.)