Here’s an important fact to alert small business owners. Companies that employ less than 100 people experience higher fraud rates compared to big businesses. The average annual loss at USD 155,000 isn’t small either.
This isn’t meant to scare anyone, of course. But only to underline the need to protect against financial fraud. Luckily, much help is at hand. And some ways to fortify your small business require only small adjustments. Here are six ways to achieve it.
How to prevent fraud
Prioritize online transactions
Digital transactions are more the norm than the exception in the post-pandemic world. However, there are still exceptions. For example, local grocers and cafes might still accept cash from customers. Making the preference for online payments known can still increase the proportion of business through them. Also, payments made to suppliers and contractors can as a rule become digital. Not only does it prevent potential internal fraud, but also counting errors and inadvertently accepting soiled or unusable currency.
Use secure financial solutions
Even without insurance, though, a small business can avail of financial solutions that provide greater security. One such example is secure checks that can protect against tampering, photocopying and forgery. Alternatively, explore products like security pens, with ink that can’t be washed away can secure the contents of a check.
Separate business and personal accounts
This point is specifically for small business owners who are also sole proprietors. It can be tempting to keep the same business and personal account since it can simplify financial and even tax management. However, it also opens a growing business up to risk. A debit card fraud, for example, can do far more damage if personal finances are also tied up in the same account
Moreover, some banks can offer protection against card frauds. So doing business banking with financial institutions that do offer this support, can provide some security against future challenges.
Get business insurance
Getting business insurance might seem like a fluffy waste of money for small business, but it can still be beneficial. Especially if you are growing at a rapid clip, it can get harder to keep track of all the financial activities. Moreover, more employees might be able to access business finances. This increases the risk of fraud.
Fortify technology
Straightforward technology security measures like antivirus software, malware protection and firewalls can also secure any small business against fraud. There are even simpler ways of ensuring protection like scheduled password changes on a regular basis. Even having a dedicated computer for all the financial processing can be a protective measure. Since access to it can be limited, there’s greater likelihood of accountability on the part of everyone who does.
Employee awareness
Aware and informed employees can also be a big asset in preventing fraud. The company’s IT system could be one dubious download from getting impacted by a virus. Regular training sessions and making important security information available are key steps to prevent this. It’s also essential to inform how employees deal with confidential data from financial information to that about colleagues or even business strategy. Moreover, careful hiring decisions should be made for roles that involve money management. Background checks and seeking references are particularly key steps in this regard.
Stay alert but confident
It can be a scary thought to consider all that could go wrong. But it’s also important to be aware of the challenges that can arise and take vigorous preventative action. And these actions don’t need to be big either. They can be as simple as changing passwords regularly. Or updating the antivirus. Or having a separate business bank account from the personal account.
But they can also be more active security measures too. Like getting business insurance or having a dedicated computer for finance related work. Also, ensuring that all employees are aware of the risks from fraud is essential. Regular information provision on how to stay secure can be helpful.
