How to Avoid Fraud in Your Small Business

Believe it or not, businesses with fewer than 100 employees are the most likely victims of fraud, according to a study by SFA Scholarworks. In fact, they lose just as much money to fraud as those businesses with 10,000 employees. If your small business becomes a victim of fraud, it can have a huge impact.

While some egregious acts of fraud are obvious, others are less so. People committing fraud often fly under the radar, so remember to keep an eye on your bottom line. If anything seems off, it's worth investigating before it's too late.

More often than not, fraud is an inside job.

The following are a few ways to mitigate your risk of fraud in your small business:

Always have multiple checks for reviewing and processing invoices. This piece of advice from Forbes is among the most important things you can do. If there is one person checking anything accounting-related, there is a risk of missing something or that they could be in on the fraud. Although you never want to suspect that your own employee could be taking advantage of you and your business, small-business fraud is often an inside job.

If that means you need to check them yourself, or hire additional members to your accounting department, it may be worth it in the long run. Don't be afraid to question unusual invoices once you see them, too. If anything, it will make it obvious that you are paying attention.

You'll also want to review accounting records regularly, and keep your accounting team informed and in frequent communication. It can be easy to let them get into their routine, and certainly you don't need to micromanage, but spot checks and reviews should be expected. The accounting team should always be aware of new clients and anything to be keeping an eye out for. This doesn't mean the accounting team is the one committing fraud, but they would more than likely be the ones to catch it or simply notice something out of the ordinary if it were to occur. Using invoicing software or enterprise resource planning can also help prevent situations like these.

Keeping these steps, like frequent checks, multiple layers of processing invoices, and open communication, in mind will help to cover you from fraud. But that doesn't mean it won't happen even if you take these proactive measures. 

You will want to be covered if any fraud does arise when it comes to your small business. The professionals at Donald W. Hudspeth, P.C. can help you avoid and navigate small-business fraud to protect your business. Contact the Law Offices of Donald W. Hudspeth, P.C., today to learn more.

Categorised in: Business Law

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