Small businesses are at a greater risk for fraud than large corporations, which is why it’s so important to protect your company in every way possible. According to research collected by the Association of Certified Fraud Examiners (ACFE), businesses with fewer than 100 employees lose an average of around $155,000 per year due to fraudulent activity.
The majority of this fraudulent activity originates with employees working on the inside. Business owners don’t typically have the time to go over every single line item on every single bill; meaning a lot can slip beneath the radar unnoticed. Also, it’s not uncommon for small business owners to mingle business and personal accounts, further propelling the potential for fraud.
Here are 5 ways you can help protect your small business from fraud.
1. Hire An Accountant That Specializes In Forensic Accounting
Every small business should be concerned about fraudulent activity. A CPA is a valuable asset to detect fraud on multiple levels.
DGK Group offers forensic accounting, which is the use of specialized accounting skills to uncover fraud or embezzlement, as well as to analyze financial information for legal proceedings. Our fine-tuned eyes are trained to identify fraud in the most likely and unlikely places, potentially saving your business thousands of dollars (or more) every year.
Our CPAs can also go through your internal controls and provide valuable reviews with recommendations for ways to better safeguard your business from fraud. The majority of fraud has to do with company cash, which is yet another area CPAs regularly go over to help ensure capital is spent appropriately.
Aside from fraud detection, forensic accounting services also includes expert witness testimony, discovery assistance, royalty audits, damage computation, claims analysis, determination of compliance, and litigation support.
2. Screen & Monitor Your Employees
When you hire someone to work for your small business you trust him or her on numerous levels. It’s highly recommended to carefully screen all employees before trusting them to work for you. Designating accounting positions to a few different employees also makes it more difficult for a single employee to get away with fraud without other employees catching on. If one person is solely in charge of certain accounts it’s much easier to funnel money or overspend without anyone noticing.
Business owners should personally monitor accounts, or hire a CPA to do so, on a regular basis to make sure everything is as it should be. If employees know that no one other than them looks over most company credit card statements or accounts they may take advantage, even buying personal things unrelated to the success of your company.
It’s important not to over monitor employees or create a culture of distrust. Employees that feel disrespected or distrusted are more likely to commit fraud than employees that feel trusted and appreciated.
It’s difficult to take on all of this oversight yourself; after all you have a business to run. By hiring a team of experienced CPAs to take care of the trouble for you, you actively safeguard your business without taking up every last second of your time.
3. Keep Personal & Business Banking Separate
Maintaining separate bank accounts and credit cards for personal and business related expenses makes it easier to keep close tabs on what’s going on, as well as pinpoint issues or discrepancies in expenses. Also, if someone does gain fraudulent access to your accounts they don’t drain you professionally and personally. Not to mention, keeping separate accounts makes it easier to file taxes and deduct business expenses.
4. Secure IT Infrastructure
Digital crimes are on the rise so it’s more important than ever to protect computers and smartphones that hold important business data. Otherwise someone on the other side of the world could rob you blind. Invest in a firewall to use for anti-virus, malware and spyware detection. Make sure to consistently back up your company website, accounting information and everything else stored on electronic devices.
5. Educate Employees On Fraud
Train your employees on the logistics of fraud, making sure they understand what qualifies as fraudulent behavior, as well as how to identify if someone within the company is participating in fraud. Our CPAs can provide valuable training to your employees to help protect you in the future.
Let DGK Help Protect Your Small Business Against Fraud
There is no proven way to prevent all fraud at all times, but there are many ways to make it much more unlikely that it happens to you. DGK Group has the tools, knowledge and expertise to identify fraud at many levels. We’d love to help protect your small business from multiple types of fraud that could otherwise go unnoticed for years.