You might have heard of numerous instances where even multinational conglomerates were hampered due to fraud related activities. But it’s not just huge corporations that need to safeguard against fraud, even small organisations face such situations. It has been observed that every business experiences a minimum of 5 percent business loss annually due to fraud.
This mainly occurs because protecting one’s business from fraud is very low on the priority list for most small business owners. But, as a matter of fact, employee misconduct has been found as the major cause of fraud in most businesses.
However, in order to avoid experiencing such an instance at your workplace you can implement a combination of these techniques-
Create Employee Logins
When employees use a common source to make entries it becomes difficult to trace anything back to one particular employee. But when each employee has a personal Id or code then you can easily track back to the actual culprit.
For this matter, you will have to create login credentials for each employee and share the same with them. This will minimise confusion in your system and you can track all the activities of your employees.
There are systems which automatically sign-off once the main system is switched off.
Regular Inventory Checks
If your business deals with a large amount of inventory and there is constant inflow and outflow of goods then you need to keep monitoring them at regular intervals. This will give you a precise review of misplaced, damaged or any unrecorded items in your warehouse.
Regular inventory checks also highlight the efficiency of your staff and help you to have better control on the irregularities. An organised inventory saves you time and helps you trace if any fraudulent activities are taking place. If you have a set pattern you can easily determine whose fault it was and take the necessary actions.
Educate your employees
It is the owner’s responsibility to inform and train employees about computer security and the updates in the systems. Employees spend majority of their day at the workplace and if there are any weird/strange activities in the office they will be the first to notice it.
They can report about the same to their managers.
If you have taught your employees how to trace back a fraud transaction then they can easily recognise/analyse it and you can identify an instance of fraud at a very early stage.
Also, inform your employees about the consequences of aiding and abetting any fraudulent activities against the company. Offer them clarity on activities which are considered to be unfair based on the business ethics that you follow.
This way, your employees are less likely to get engaged in any malpractices as they are aware about the repercussions of their actions.
Protect company assets
If you have budget flexibility then set-up internal systems which could measure fraud rules and regulations committed by your employees. This will safeguard your business assets from getting lost due to any fraudulent activity.
Most businesses run short of cash balance and lose track of their expenses. In order to avoid such situation you can maintain petty cash or introduce a specific sum at the start of every month.
Irrespective of this, if you face a financial crunch you get in touch with a reliable cash flow finance service who can offer much required guidance as per your business needs. They can also provide you with the flexibility of maintaining your business’s cash flow, without compromising its security against instances of fraud.
You can also invest in an accounting system which allows you to track the records of your assets, liabilities, expenses, debts and outstanding payments.
Double Check Activities
You can also implement processes in your business which audits employee activities as well as yours. This is a smart option to reduce fraud and also to minimise the number of mistakes/miscalculations made by your employees.
When you hire employees to handle finances make sure that they have sufficient knowledge about it so that they do not make incorrect entries in the journal, ledger, balance sheet or any other financial statement. This way, you can decrease the possibility of any errors occuring.
If it is not possible for your business to implement all of the above techniques, you can always pick a combination of 2-3. But, make sure that you combine a few tricks rather than depend on just the one.
Implementing tricks which give you same/similar reviews would be a bad choice because you might not receive the kind of comprehensive review you are looking out for to thwart potential instances of fraud.
Therefore, evaluate different strategies and their results before you implement them.