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Small businesses are among the most vulnerable groups to fraudulent activity. These businesses are more susceptible and face a greater risk of fraud because typically, they have employees working across many different departments as their job description, there is a closer relationship between the staff and owners, there are few oversight procedures in place, their accounting department has less expertise on financial functions, and there is a larger impact on the bottom line of a small fraudulent event.
How can you prevent fraud in your small business? Here are a few tips to help you keep your company safe:
Establish a system of checks and balances: Have at least two people handling your accounting, and cycle the duties between those people. This gives another person the ability to spot discrepancies in the numbers. You can also use outsourced accounting services to ensure someone outside of the business is handling your bookkeeping.
Implement internal control processes and procedures: Internal controls can help prevent and detect fraudulent activity. Some of these internal controls could be restricting access to account data and inventory, using multiple people to sign off on expense reimbursements, over time, other payroll and accounting functions, and performing audits on your logs and bookkeeping. Be sure to report any changes to your accounts.
Communicate with your team: Encourage your employees to speak up when they see something is wrong. They should feel safe and secure in reporting anything that may seem suspicious or any changes they see in the books. Anonymous reporting systems may be the best option to ensure employees feel comfortable speaking up about fellow employees.
With these systems and procedures in place, you can make it more difficult for employees to perform fraudulent acts. At TGG, we want to make sure that your company is safe from any potentially damaging fraudulent activity. Contact us for more information about how you can keep your company safe by outsourcing your accounting services.
This post was reviewed by our team of accounting and financial experts. TGG’s mission is to make business owners’ lives better through excellent financial management. We strive to provide the most up-to-date and objective information on accounting-related topics so our readers can make informed decisions based on factual content. All posts undergo a review process with at least one member of our Leadership Team to ensure accuracy.
This post contains trusted sources. All references are hyperlinked at the end of the article to take readers directly to the source.
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Matt Garrett is the Founder and Chief Executive Officer of TGG. He is a regular speaker across the country on behalf of Vistage educating business owners on the need for sound financial practices, and is Vice President of the Board of Directors of FINACA. Under Matt’s leadership, TGG has received the following recognition: INC. 5000 top companies in the U.S. five years in a row; one of “San Diego’s Fastest Growing Companies” the past four years; and is among San Diego’s “Best Places to Work.”
