In this modern world, fraudulent activities can happen anytime and anywhere. Contrary to what most small business owners think and expect, scammers nowadays easily target any business. Unfortunately, this can affect your bottom line severely. Hence, it’s crucial to know what small business frauds are and how to mitigate them.
Preventing small business fraud can be successful when you know what signs to look out for and what action plans to instigate. Modern thieves have been developing their tactics, so it’s only fair to keep up with their know-how and strategies.
To help you, here are three things you need to know about small business fraud:
Apply Anti-Fraud Action Plans
Small business fraud can be prevented successfully when you have anti-fraud action plans. Fortunately, there are many ways to do this. For instance, you should hold regular business audits for internal and external business transactions. Fraud can happen anywhere, and it’s similarly crucial to check your employees, their financial transactions, and their records.
It’s also valuable to inspire employees to whistle-blow when they see someone doing fraudulent activities inside the company. Create an employee reward or protection program for their identity to be covered while investigating the process. Another effective preventative measure is conducting business fraud training to educate and inform employees of what signs to look for and avoid.
Anti-fraud procedures should be applied to any business, no matter how established or how new it is. Without these preventative measures, small organizations can be extremely vulnerable to fraud, which can cause significant damage to their limited resources. And if you’re second-guessing these methods due to the investment needed, fret not; you can yield positive ROI in time when you could avoid costly frauds that will affect your bottom line severely.
Alongside an anti-fraud action plan, you can research to know and understand the legal options you can take once you get attacked by small business fraud. To know more about your legal options, you can visit this recommended site.
Be Familiar Of The Common Types Of Frauds
The next step is to familiarize yourself with the different types of frauds common for most businesses today. Take a look at some below:
It’s a major issue for small businesses to remain safe online since they may lack dedicated security teams. Cybersecurity practices require the support of advanced information technology experts. If you lack such, you could be exposed to fraudulent online phishing scams.
Despite the ease of processing online payments and storing customer details in the cloud, it’s without question that technology leaves you vulnerable and unsafe. Cybercriminals target your data, and even financial details, and these top internet scams have affected numerous companies to date.
One common fraud for businesses is payment fraud. Whether you operate online or on-site, this is possible to happen. Those who run a brick-and-mortar business should be on the lookout for payment fraud like counterfeit bills. On the other hand, even credit cards can be scammed too.
The magnetic strip on a credit card may be removed by fraudsters, forcing a cashier to enter details manually. Thereby, it’s possible to provide wrong or other person’s card details. However, there are ways to mitigate these fraud risks by keeping money detectors and ensuring to validate credit cards with an Identification card.
Business Loan Fraud
As a startup company, some business owners feel desperate to source funds. In such cases, scammers usually take advantage of their unstable condition. There are fake and fraudulent loan companies and even loan sharks who will provide the business capital you seek but scam you with large interest rates that they didn’t disclose in the first place.
Insurance fraud also happens to business owners. There are con artists who fake injuries of getting hit by your business operations or business vehicle to get compensated. This could happen even among your employees too. They can fake injury or get hurt intentionally to claim insurance. Therefore, it’s always wise to invest in dashboard cameras for your company vehicles and security cameras for your business to protect yourself against these scams.
Be Alert Of Red Flags
There are ways to see if a business is high-risk, but when it comes to your employees, it’s already risky enough knowing that they can scam you off anytime. Unknown to some business owners, fraudulent activities happen a lot internally. Fraudulent employees are often first-time offenders, and most business fraud occurs inside. As a business owner, as much as you prioritize finding the best employees, you should also be aware of detecting red flags. No matter how long your employees have been working in your office or how much you trust them, you should always leave room for care.
That said, some of the red flags that may spot a possible fraudulent activity are when your employees are not honest with their reports. This means they could be purchasing or consuming more company money and budget than is allowed. Also, observe their habits and understand their personal conditions as these factors can lead them to make scammy plans in your business.
Fraud can happen to anyone, and your small business can be an easy target. You can avoid scams by educating yourself and your employees about them and ensuring that you remain vigilant at all times. Hopefully, you can apply the tips mentioned above and invest in tools and equipment that can prevent fraud. Also, it’s ideal for working with criminal lawyers so they can help advise and mitigate fraud risks.