Simple Ways to Prevent Financial Fraud in Your Company

Surveys show that around half of small businesses do not think they are big enough to be a target for fraud, and yet overall, 47% of companies experienced fraud within the last two years. These resulted in a problematic accumulated financial loss that affected both small businesses and major enterprises. Even more worrisome, few businesses can report these fraudulent activities promptly.

Thankfully, this doesn’t necessarily mean your business has to continue with these misdeeds under its belt and to hope for the best. There are numerous actions you can take to prevent fraud in the company.

Make use of digital prepaid cards.

Some of the worst instances of fraud seem to do with financial resources more often than not. Misuse of resources, books being manipulated, unnecessary or personal expenses done using company finances, and even overtime and compensation fraud are just some of the most often seen variations of this deception that comes hand-in-hand with thievery.

One of the ways to circumvent this is by making use of digital prepaid cards. Using these, you can more stringently manage any funds going out, and there would be no need for one single shared corporate account for expenditures. Since each person has their own card with information and sets the amount put in it, it’s easier to track any discrepancies. Even the likelihood of that happening is lessened because they have a finite amount to spend, which will eventually render their card unusable when empty.

Conduct regular and unplanned audits.

Having regular audits is a good way to manage your finances in general and discourage others from even trying their shot at committing fraud within the business structure. The important part of using this method is to make sure that the auditor is also actively aware of the various types of fraud schemes out there. This adds an added layer of scrutiny when looking for falsified or tampered statements and the like.

A good practice to apply with your auditing is to add some randomized audits so that any perpetrators can be caught off-guard, and you can have the unexpected on your side.

Track access to sensitive data.

The problem isn’t just identifying the fraud itself in an effective and timely manner. Still, it also has to do with actually being able to pinpoint the individual or group responsible for committing such acts. In today’s day and age, much of a business’ sensitive data can be accessed and stored within digital landscapes. And although this may be built for conveniences, it also opens up other avenues for fraudsters to thrive. This makes it so important to set some systems in place that essentially act as a digital paper trail.

You can track and monitor specific data so that you can check log-in credentials and even IP addresses. This way, when you find the general source of discrepancy, you’ll have a narrowed down list of possible suspects.

digital tracking

Be stringent with background checks.

Employees may be tempted to commit fraud if the opportunity seems readily available and they are in need financially, however, statistics actually show that the most likely to commit fraud are those in higher management and leadership positions. In particular, finance executives and CEOs are high on the list of corporate fraud, exploiting weaknesses they intimately know within the system. If you have any external partners, it would be wise to double-check them before moving forward.

Although motivations vary, it would be beneficial to do more intensive background checks to see any tendencies, sketchy history, and first-hand accounts from previous employees and co-workers regarding behavior and character. All too often, businesses are victim to fraud from individuals never expected to be the perpetrator, particularly because of the lengths they go to establish trust and a good reputation within the company.

Delegate duties well.

As much as possible, don’t put all responsibilities toward asset management on one person. Not only is this inefficient, but it opens you up to more vulnerabilities in terms of fraud prevention. First, if this person is the fraudster, it would be much easier for them to manipulate records and manage assets as they please. On the flip side, even if they were not the culprit, it would be harder for them to stay on top of things and actually find the source of the misdeed because of the workload and vast scope already on their plate. ; A simple workaround here would be to delegate these duties accordingly, having a trustworthy team that you can effectively monitor and can more effectively pinpoint sketchy instances.

These are just some of the most practical and achievable ways to prevent fraud within your business, and with the right strategy, you can ensure that your company won’t fall under at the hands of its own people.

Scroll to Top