Business Fraud Prevention

Small and big businesses alike are vulnerable to fraud. Blank cheques and fake invoices are evidences of fraud.

As a business owner, the first step to preventing fraud starts with knowing the methods employees use to execute a fraudulent activity. Stealing can be done in many ways and one of which is by placing inventory in garbage bins as a way of hiding stolen objects. Employees can resort to this extreme and desperate measure to steal.

Another cause for concern is when you see a bank statement addressed for a friend or a bookkeeper, but not your vendor. Sure you can consider one mistake as due to incompetence, but if it happens habitually, you know that something is cooking.

Ways Fraud is Committed

A business owner may think that bookkeepers just do not know what they are doing, but there are telltale signs that you should look out for to determine if there really is a case of fraud. If a bookkeeper takes time off, and cannot deliver monthly reports, you know that you need to conduct an investigation. It is very unlikely for bookkeepers to not have the ability to match accounts receivable and accounts payable to the balance sheet considering it is their job.

Not generating an updated financial report raises questions because this is one of the important tasks that a bookkeeper should carry out regularly. There can be some lame excuses such as faulty software or the lack of resources to reconcile a bank account.

How to prevent fraud?

Bookkeepers must be given deadlines as a way of preventing unusual activities. Reports must be delivered to you after month-end and reviews must be done on a monthly basis.

It would also be helpful if you separate bookkeeping duties of your business. Assign a person to enter the bills, and another for paying the bills. There should also be an evidence of financial transactions made. For instance, employees should attach cheques to invoices so you can monitor where the money is spent. Do not forget to sign all your checks as well.

You will also have to perform physical inventory checks. It is important for employees to be aware that you are monitoring transactions. Ask questions and get regular updates from your bookkeeper. It is easy to overlook these things if you remain complacent about your business activities. Do not wait for the time when you have to look over your shoulder as paranoia has already feasted upon you. If you suspect that your employees are engaging in fraudulent activity, act swiftly before matters could get worse.