How Small Businesses Can Avoid Fraud

For most businesses, fraud prevention would sometimes end up at the bottom of the list of priorities in the development agenda. Fraud prevention may sound like a problem that could be solved by simply installing security software or outsourcing a managed service provider, but it’s not that simple.

According to a study of the Association of Certified Fraud Examiners back in 2016, organizations with less than 100 employees experience a median fraud loss that reach $150,000. That is considered a significant loss, especially for startups with limited financial capacities.

Good thing there is still a bright spot for this field. Besides having managed IT services in Hagerstown, we’ve come up with a list of a few easy steps that small businesses can take in order to detect and deter fraud before it causes havoc to businesses:

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The Most Prevalent Types of Fraud

Fraud may seem like a small problem in the movies, but it’s flexibility and ability to withstand basic to intermediate levels of security makes it difficult to manage and assess. To simplify things, you may need to reevaluate your employee-employer relationships, as well as the vendors you’ve been outsourcing.

Even if someone may seem to be the most trusted and loyal worker in the business, anyone could get tempted with money; and in most cases, have a grudge with their bosses. These stress factors can be the cause of someone committing fraud against you and your business.

Despite that there are many types of lingering fraud, there are always existing ways in which you can make your small business safer without sacrificing a chunk of your financial costs. Here’s a list of tips on how your business can avoid becoming a victim of a fraud:

Investigate Your People Before You Hire Them

This may be out of the usual company tradition but in order to minimize unnecessary costs, you may opt to consider doing background checks in hiring potential employees. If you are hiring managed IT services, you can ask for credentials or compliance certificates.

Relying on gut feeling will never do the trick these days. Sometimes, you will need an objective reason as to why you should hire someone. Doing a criminal background check is legal. As a matter of fact, most companies require it in the Human Resources Department when it comes to handling interviewees. This way, you can easily see their history, both in personal and professional so you can be forewarned with issues coming your way.

Open Communications and an Open Door

Communication is also critical in preventing fraud. Employees that are not part of the management team may notice some things that leaders cannot see. Employees should feel comfortable and safe speaking up and voicing their concerns. Your people need to be able to feel like they can bring up anything suspicious to management and leadership. For employees that may be encountering financial hardship, some small businesses have an added benefit of offering small loan services. These are paid back through payroll deductions and an alternative to stealing.

A Clear Fraud Policy Statement for Employees

While you may feel that fraud is against company policy and that it is common sense amongst staff, you still need to explain it to current and potential employees so they wouldn’t get an impression that you're not serious about it.

Contracts which indicate rules and regulations about fraud is necessary, and you and all employees should sign it. Your small business needs to put your expectations in writing, and that includes a statement that your organization values honesty and loyalty amongst employees. Also, be clear about enforcing the law if ever they are found guilty with committing a crime.

Safeguard Your Small Business’s Intellectual Property

Those who are planning to commit fraud have common targets, and this includes stealing copyrights, trademarks, patents, and contact lists. To safeguard you and your business’ digital data, hire managed IT services in Hagerstown as they can implement the best security practices.

You will also need to have a strict Fraud Prevention Policy, as well as a section regarding intellectual property (IP). Make sure that your employees are aware of it. You should consider registering any trademarks and patenting any intellectual property to mitigate potential issues on privacy.

A good first step here is to actually create a list of your intellectual property, and that includes the priority properties which need to be secured. This way, you can easily create a plan with your managed IT services provider to mitigate the risk of IP theft.

Swift Systems

If you need help in managing your IT environment and network security, call Swift Systems. Our team will implement innovative solutions to protect your company from fraud and other cybercrimes. Give us a call today for any inquiries.