National Fraud Awareness Week: How to Keep Your Business Safe
Luckily, there are several steps that you can take to protect your company. In this post, we’ll review how you can avoid actions that’ll make your business a target for fraud so that you can focus on building a great company!
6 Ways That You Can Protect Your Business From Fraud
1. Keep Your Books and Inventory in Order
As a business owner, you should make sure that your company’s finances are organized and tightly monitored. Unfortunately, there are numerous ways that a business can get taken advantage of, even by nearby seemingly safe sources. For example, unscrupulous employees could be stealing your inventory or money. Vendors, likewise, may be mischarging you, which can put your finances at risk.
By developing a clear picture of your finances, and regularly monitoring your invoices, receipts, and other assets, you’ll be able to better identify fraud. Also, you should monitor your inventory consistently to ensure that you have an accurate picture of how much money and inventory you have.
By using the appropriate point-of-sales (POS), accounting and inventory software, you’ll be able to keep accurate records. While managing your books and inventory can be time-consuming, it will pay off in the long run. Not only will you be able to spot fraud, but you’ll also have a better understanding of your business and its financial health.
2. Secure Your Data and Digital Assets
Your business’s digital data, such as transaction information, credit card numbers, and personal addresses, should be encrypted and properly secured. In addition, it should be backed up periodically, and stored offline when possible.
Likewise, your website should be maintained and always have up-to-date plugins and anti-virus software.
3. Train Your Employees to Spot Counterfeit Cash
Did you know that counterfeit money costs small businesses significant losses each year? Unfortunately, once you’ve accepted counterfeit cash, you have little recourse. However, by training your employees to spot counterfeit cash, you may be able to stop fraudulent transactions before they occur.
If your business accepts cash, consider investing in a counterfeit detector that’s equipped with magnetic, UV, and infrared technology that will check for fake bills. You can also use a counter detector pen to spot counterfeit cash.
If your employees discover a fraudulent bill, remember that the customer may have been ripped off. While you should decline the bills, don’t accuse the customer of illegal activity. If they have been the victim of counterfeiting, you don’t want to lose their business!
4. Vet Your Vendors
Another way that you can protect your business from fraudulent attacks is to thoroughly vet your vendors. Obviously, you’ll want to avoid vendors that sell counterfeit goods, or overcharge for their products or under-deliver inventory. When a vendor delivers products or services, you should double check the order to ensure that they are delivering everything promised, and that you’re being billed for the correct amount.
Keep in mind that mix-ups happen. A vendor may have accidentally delivered the wrong products or not enough items. By auditing deliveries, you’ll be able to spot issues that your vendor can rectify.
So, how do you vet vendors? You can start by checking the Better Business Bureau to read company reviews. If another consumer has been ripped off by a vendor, they may have reported it.
There are several other steps you can take before onboarding a vendor, including:
- Seeking quotes from multiple vendors.
- Checking government watch lists.
- Verifying licenses.
- Checking business credit ratings.
- Ask potential vendors for references.
5. Hire the Right Employees
As we previously mentioned, it’s crucial that you monitor your company’s employees to ensure that they aren’t participating in illegal activities. When hiring new staff members, you should conduct background checks and ask for at least three character references from candidates. While this can be time-consuming, it might save you from headaches later on.
If employees are directly handling your finances, divide up responsibility between multiple parties and create a set of checks and balances. This makes it harder for someone to take money that isn’t theirs. If one employee is acting unscrupulously, another will likely spot them. In addition, you should be transparent with your employees about how you monitor company finances and inventory. People are less likely to steal if they know someone is watching!
6. Check Your Business’s Credit Report
In addition to the other tips in this post, you should frequently check your business’s credit report to ensure that no one has stolen your identity, taken out credit cards or loans in your name, or gained access to your business’s financial information. If this occurs, you must contact the appropriate authorities and financial institutions immediately.
Conclusion: Make Anti-Fraud Measures a Priority
It’s not enough to audit your business once or twice per year. Fraud is often the result of poor monitoring on the business owner’s part. By proactively and consistently monitoring for fraud, you’ll reduce risks, thus protecting your business, livelihood, and customers.
Do you have any other tips for small business owners looking to better protect their companies during National Fraud Awareness Week? Let us know in the comment section below!
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.