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Fraud Prevention for Small Businesses

According to statistics released by the ACFE (Association of Certified Fraud Examiners) for 2014,  “28.8% of all companies with less than 100 employees are victims of fraud with an average loss of $154,000.” Additionally, 77% of all the frauds covered by the study came from internal departments such as accounting, operations, sales, customer service, and finance. Let’s specifically look at fraud prevention for small businesses.

According to Forbes, the same report revealed that small businesses can expect to lose 5% of their revenue each year.   These are numbers can be very depressing for existing small businesses or anyone just starting out.  If you are a small business owner, you need to take smart steps to make sure that you and your investments are protected from fraud, and there are five particular areas where you can make the most out of some small actions to get great fraud prevention.

  1. Credit Cards and Bank Accounts

Doing your best to protect this information is your best defense when it comes to fraud prevention. Some basic ways to keep your account numbers safe are mostly just common sense and good judgment—don’t give your card out to anyone other than trustworthy employees or businesses, make sure that bills are delivered to a secure location that can’t be accessed by just anyone, and keep your personal accounts separate.

  1. IT

As with most things these days, the battle lines for fraud prevention are drawn pretty squarely in the digital sphere. Here again, you will want the basics such as a solid firewall and anti-spyware/anti-virus. If you have a business that deals in particularly sensitive information, it could be worth the investment to speak to professionals who will give you the extra security you need. But, for every business, make sure there are firm policies in place regarding access to passwords for employees, put all of your banking information and access on one singular computer if possible, and use a trusted source for payment processing that puts security first, like

  1. Employees

Fraud prevention can begin and end with one decision: who to hire.

Of course, it can be nearly impossible to tell who is lying based on one interview, that’s why background checks are a great way to find out if any potential hires have been hiding something from you.

  1. Education

For those employees that you do trust, embrace the possibility that even though they are the most likely suspects, they might also be your best chance at catching someone in the action before real damage is done to your accounts. Educate your employees on the signs that fraud might be occurring in their departments, and encourage them to speak up if they see something suspicious with their co-workers, clients, or anyone else who might have access.

  1. Records

A simple, but incredibly powerful line of defense is record keeping. Make sure that your employees are preparing for random audits. This will keep them honest and also give you access to great files that should show any funny business upon close inspection.

About the Author
Scott has more than 29 years of professional product marketing and executive management experience in the high-tech industry. For the past six years Scott has worked for ProPay helping small businesses grow their businesses through online payment acceptance.

Scott earned dual bachelor’s degrees from Brigham Young University in Marketing and Finance. He also earned an MBA from Colorado State University.

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