Keep Your Business Safe

Attention small business owner; there may be a thief inside your business. Do you know that small businesses experience fraud at a 100 times higher rate than large companies? This is an alarming rate that must be taken seriously. Several reasons are implied for this higher existence of fraud in smaller businesses. First of all, the highest rate of fraud is committed by the accounting personnel. The small business may have one accounting professional who is given complete trust in dealing with all financial matters. Another reason why there is higher fraud in small firms is because of the lack of internal controls. Small businesses rarely hire an outside source to audit or review their accounts and to hold the accounting professional accountable. The difficult thing about fraud is the fact that fraudulent people look like you and me. They are usually not criminals, but instead our friends, co-workers, and family. Since the person who commits fraud can be a close acquaintance we may tend to overlook or be in denial that they may actually be stealing from our business.

Instead of focusing entirely on why fraud happens in a small firm I want to give some tips to preventing fraud from happening in your small business. Many times fraud occurs due to blurry boundaries, lack of supervision, or lack of respect of the leaders in the company. Fraud can be best prevented by creating an ethical environment; one of integrity and respect. The first step in fraud prevention is the implementation of a fraud policy. If a fraud policy is in place, there will be no room for misinterpretation. An employee should be well aware of the rules, regulations, and punishments pertaining to fraudulent activity. The second step is to have high moral conduct when it comes to dealing with customers and suppliers. This example being set forth will elevate the morality in the other employees. Thirdly, establish a place of social unity and respect amongst the employees. Happy and connected employees will not want to steal from the company they enjoy working for. The forth step is to allow no exceptions to the rules. That way there is no gray area in what is right and what is wrong. The last step in preventing fraud is to always screen your potential employees. This means you check references, get background and credit check, and interview them with proven techniques. Many businesses do not take the hiring process seriously enough. It is the first and foremost step in preventing fraud. If that fraudulent person does not get hired they will not have a chance to steal from you.

I hope that you have gathered some new information about fraud and how it affects a small business. As the entrepreneur, you are the one who is responsible for the health of your business. If you do not take precautionary measures against fraud then I can almost guarantee that it will occur in your business. Please begin a plan against fraud now if you have not already done so.