By James Davis
As a business owner your focus is on driving sales, cutting costs, managing staff. But what if all that focus and hard work is being undermined by someone who is quietly stealing your money?
Fraud is more common than most business owners realise and 60% of small business fraud is perpetrated by an insider, often someone you trust.
Fear and suspicion are not going to protect you from fraud, but well executed internal controls will. Let’s look at two of the most common types of small business fraud and tips on how to prevent them.
As soon as you hire employees you become vulnerable to payroll fraud. This could be employees adding extra hours on their timesheets, commissioned workers reporting false sales, or even creation of fictitious employees.
Your best protection is to ensure that more than one person in the organisation is responsible for approving the payroll, and that key ‘sign-offs’ by senior staff are in place. This allows you to prevent the problem in the first place
Fake invoicing is another scam that preys on sloppy administration. An employee submits a duplicate or inflated invoice. Or, a cyber-criminal sends a legitimate looking invoice by email.
Procedures to check client invoices for discrepancies versus orders or unusual bank details will go a long way to preventing this type of theft.
The best way to protect your business is to have systems in place that make it difficult for fraudsters to go unnoticed.
Conduct an audit of all your systems and consider how your current processes might be at risk of fraud. This includes your processes for hiring new staff, approving and paying invoices, monitoring cash and stock.
For business owners who want to be protected, but don’t have time for detailed audits, try HQB’s Fraud Prevention Service.
This includes a thorough systems audit, with ASIC registered auditors observing the actual operation of your business. A Risk & Control Matrix is then provided to highlight areas of risk and recommend internal controls. The HQB team can also provide assistance in implementing the new systems.
Whether you choose to audit your systems yourself, or you bring in outside help, the important thing is to be aware that tight internal controls are your best protection against fraud.
For more information go to hqb.com.au or call 6652 2333.
This article is compiled as a helpful guide for your private information and is subject to copyright. We suggest that you do not act solely on the basis of material contained in this article because items are of general nature only and may be liable to misinterpretation in particular circumstances. We recommend that our advice be sought before acting on any of these crucial areas.