Protecting your business from fraud is a daily task that is draining if ignored. Prevention is both time saving and can save the company if a lawsuit is filed. When owning, or being a part of a business both big and small, your name is on the line when it comes to debt and security. Businesses lose billions of dollars per year because they are not conducting affairs with a fine tooth comb. When it comes to protecting your name and investments, being strict on your accounts and policies will indeed pay off. The changes that are needed are not drastic, just simple, intelligent alterations.
Add Additional Oversight
Adding oversight may seem a little over the top at first; however, the fundamental principle behind it is people are less likely to fudge numbers when someone is standing over them. No matter how big your business is, ensuring that information both coming and going represents your company to its fullest is critical in maintaining customer relations. Putting in place simple monitoring such as requiring documents be turned in once a week for review is an easy change, one that may be needed more than you had thought.
Have Two Filing Systems
In this day and age, everything is done online. How safe is your information if your employees can access it at will? To ensure your business will not fall victim to fraud, keep a paper trail of every transaction, especially payroll. Being digital is great for convenience, and systems like cloudpay save a lot of time and energy. Whilst this system has security measures built in, many digital systems do not, which makes you an easy target. When keeping two records; provide your bookkeeper with all of the needed documents with explicit instructions. Keeping your records encrypted digitally and filed according to a strict policy only the clerk will know is a consideration not to be overlooked. If you decide to persist with a paper-based system, you can still make digital backups of documents using management software (like this – https://www.filecenterdms.com/info-document-scanning-software.html) which could prove useful for searching them easily.
Separate Your Payroll Admin From Your Advisors
Fraud is not limited to outside hackers, in fact; most leaks happen from the inside. Separating those who sign the checks from those who oversee the accounts is one of the most important, hard-learned lessons of entrepreneurship. When enacting this separation, your employees should know there will always be someone to double-check their work. There needs to be a written log of how much money is leaving the company with an analysis of each aspect. Having this breakdown will allow your accounts payable advisor to see immediately if any suspicious activity is going on.
Checks and Balances
When a person gains a title, they are sometimes influenced negatively by the power that comes with some letters following their name. It is important to understand that promoting one person will change the dynamics of a company; therefore, one must have a method to ensure the person is doing their job to the best of their ability. Frequent, unannounced audits will help keep employees at the top of their game and looking over their shoulder. Fraud is significantly reduced when you are not aware of when someone could be doing a quality review of your position.
Keep Things Mixed Up
Excellent, honest employees deserve to be recognized. The workers that put in extra hours to complete a project are the ones that are not afraid to step up to the plate to be a team player. Those employees are keepers. However, when you notice employees leeching off the clock, they only slow down the process; it is time to cull them out of the payroll. No employee should feel their job is secure; this includes senior employees. Your business should not tolerate slacking on the job. Not only is this a terrible waste of money and resources, you are allowing an open door for fraud. By that employee not working avidly, they are not overseeing their peers for quality control.
Develop a Method for Tips
Employees often overhear what is said more often than a key player in the business. Bysetting up a system with an anonymous tip box, a referral can save a company from future fraud attacks. An investigator who is kept anonymous can be the difference of ending in red or black come the end of the fiscal year. It is imperative that the identity of the researcher is not revealed. Otherwise, that person will not be able to find out much information. One important note is that you may get a lot of false leads, but that one good tip can save your business.
Extensively Train and Give Refreshers
When someone gets comfortable in their job, errors are more likely to occur. Training new employees is standard practice in every workplace. Consider how long ago the manager in charge of training the recruit was hired in. If it has been over six months, it is suggested to give a refresher course. No matter how small or big your company is, having employees adhere to the policies setup is crucial. Fraud can happen on accident; a simple typo in an account number, or emailing the wrong contact can be devastating.
External Audits
Required by law in most states, starting a healthy plan for annual audits is a wise investment. If this needs to be done, or if the process is optional, depends on the size of the company and if it is held publicly. Employers tend to trust employees too much. Hiring an outsider to run over all of your accounts, payroll, practices, and so on can be eye-opening to many businesses.
Being proactive in preventing fraud in your business is more cost-effective rather than dealing with it as it comes up. A business, no matter its size, can be a victim of fraud and it can happen anywhere at any time. Some of these tips may seem like you should not trust those who you employ, but you can to an extent. Unfortunately, this world is making great, sound-minded individuals turn on their company for economic reasons. Do more to protect yourself and your investments today. Making simple changes can save you stress in the long run. Delegate responsibilities, and ensure they are being done accordingly with proper oversight.
Call the Webb Law Group at (559) 431-4888.