Smaller businesses can be extremely susceptible to cases of fraud. If you own a business, using the advice here will help to reduce and perhaps even eliminate cases of internal and external theft.
There is no question that the cases of fraud being perpetrated against a business are becoming worse, both in the total number of instances as well as the amount of money that is consistently being lost. The sad part is that as much as three-fourths of these crimes against various businesses were carried out by those inside of a company.
Both small and medium-sized businesses are at risk of falling victim to fraud. Fraud, for these particular sizes of businesses, may be compounded due to the informal nature and the fact that there are fewer staff members, which results in less oversight as well as a lack of checks and balances. In fact, the majority of small businesses are extremely informal in nature, and many times, they are typically formed with family members or friends. This makes it even more difficult to detect, or even suspect, any instances of fraud.
Protecting Your Business
There is no question the media is full of stories that focus on consumers falling victim to fraud. However, the reality is that businesses, especially smaller businesses, are the victim of fraud even more than consumers. These various types of fraud can be widely varied, from fraudulent returns from consumers to employee accounting scams and even information theft from an outsider.
The Sources of Business Fraud
If you want to understand the various types of fraud your business may fall victim to, you have to first know the sources of these crimes. The top sources of cases of business fraud, in order by cost and frequency include:
- Officers and employees of a business.
- Customers of businesses.
- Outside contractors.
- Attacks from third parties.
Detecting Fraud
Since even the smallest act of fraud against your business can affect your bottom line, it is essential you set up procedures in order to verify this is not taking place in your business. It is important to create an anti-fraud police that will:
- Institute a system of checks and balances.
- Develop written procedures that will dictate the work processes for critical areas.
- Detect fraudulent activity.
The bad news is that fraud may not be able to be completely eliminated, but with some help, you can reduce the occurrence of it by a significant amount.
Business fraud is no laughing matter. In fact, this issue, if left to continue, can be the downfall of an entire business. If you are facing this type of issue, visit the RKE Law Group website for more information.
