By Satrajeet Mukherjee for SKB Accounting
All businesses are vulnerable to fraud. However, Cyber security often gets overlooked in the case of smaller operations which makes them more susceptible to cyberattacks. While proactive behavior is beneficial and essential, it’s not enough to keep fraudsters at bay.
According to PwC’s Global Economic Crime and Fraud Survey 2020, 6 was the average number of frauds per company. The total cost of these frauds was US $42 billion with 13% of companies that had suffered a loss to fraud saying it amounted to US $50 million-plus.
Some common methods of fraud involving small businesses are Billing schemes, Payroll scams, Cash larceny, Check tampering, Inventory theft, Financial Statement Fraud, etc.
Here are some measures to safeguard your business from frauds:
- Update your Security systems and IT infrastructure: Investing in an Identity theft protection system can be beneficial if your business accepts online payments. Important data of the company will be encrypted and protected from hackers. Backing up critical data on secured servers will also help protect the same.
Select an effective Fraud Management System for your organization. It can do real-time screening of activities across multiple accounts to identify and prevent fraud.
- Educate your staff: Conduct regular training sessions on prevention measures that should be taken. Also, inform them about common security threats and how they can be avoided. Make them aware of phishing emails which are the most common way hackers enter company databases.
Ask employees to change their passwords every 60-90 days and keep hard to decipher passwords.
- Purchase Insurance: Insurance is crucial in case a fraudulent attack occurs. Consider Identity theft insurance in case of a malware or spyware attack. This will make it easier to recover from the losses in the event of an attack. You might even get reimbursements depending upon your policy. Also, look at Insurance policy options that protect you specifically from financial fraud.
- Outsource Accounting and bookkeeping: Outsourcing your accounting and bookkeeping functions reduces the chances of fraudulent activities taking place in your business. When you avail virtual accounting & bookkeeping services, you get experienced professionals. Owing to their experience, they can identify fraudulent activities which may be deeply hidden in your records. This can also be helpful when there is a lack of internal controls which is the leading cause of hampering accounts and records.
- Employee Background checks: While expanding your workforce, don’t entirely rely on referrals and experience. Conduct strict, thorough background checks focusing on tiny details.
Pay special attention to the hiring of employees who will be handling cash, records, or confidential data.
- Regular and Surprise Auditing: Auditing in regular intervals will help in avoiding fraudulent activities as well as help in detecting them. Any unusual activity can be identified and acted upon. Surprise audits can keep a check on the same. This will reduce chances of records and accounts getting hampered.
Keep in mind these steps to avoid fraudulent activities in your company. Small businesses are very much vulnerable and these fraudsters prefer to exploit them since they are easy to take advantage of. Online accounting apps & consultations from CPAs (Certified Public Accountants) are the best to check these frauds since they come with high-level protection.
Thus, don’t waste more time before opting for SKB accounting which will provide you with all the necessities for your business with a professional level of security. Sign up now!