Protect your Business from Internal and External Fraud

September 27, 2013 11:21 am

In a survey of 3,000 American businesses, 88% reported some form of fraud. From this statistic, we can easily ascertain that corporate fraud is a serious problem. Smaller businesses are an easier target, as their largely informal set-up can lead to grievous oversight.

Unfortunately, the vast majority of fraudulent crimes are perpetrated from the inside (more than three-quarters). Of course, employers want to trust their employees; to a certain degree, there has to be a level of trust between co-workers. That’s why it’s so important to be well-informed about the risks of fraud.

A common way that employees can behave fraudulently is to fake personal injuries, in order to get compensation. In this situation, it’s crucial to maintain a certain level of video surveillance, to illustrate any illegal actions.



And your valued customers…they too can pull a variety of fraudulent tricks, so keep an eye on them. Not only may they try to use fake money, but they could use stolen credit cards or attempt to return an item that wasn’t purchased from your business. Personal injury claims are also another worry but just be aware of the risk your customers pose.



Sometimes, bad contractors take advantage of their self-employed position. They can overcharge and overbill, as well as fail to perform the work they’d promised. You could even be billed for work that never took place.


business fraudThird Parties

Because we live in an online age, electronically, you are also vulnerable to fraud. Whether it’s identity theft or hacking, this can impact your bottom line heavily, and you aren’t afforded the same rights as the general public. So, it’s important to take steps to make yourself as fraud-proof as possible.


Whistleblowing and Policies

That means developing anti-fraud policies, in writing, and making sure your management team is well-educated on this matter. Procedures should do all they can to halt fraud and responsibilities should be shared between more than one person.

If you don’t already have an anonymous whistleblowing system, set one up as soon as you possibly can. An anonymous tip box works. Investigate all claims and protect your employees from vilification. Members of staff may not wish to take the risk of reporting a colleague on suspicion of serious fraud because they wouldn’t want to be perceived as a tattletale or don’t want to be held responsible for getting an employee into trouble. When you allow them anonymity, they are more likely to come to you.



Internal and external audits should be performed with regularity. Surprise audits should be the norm. This means that potential fraudsters can be caught quickly and your company can remain protected. Large businesses are subjected, by law, to external audits, so begin early and be on the right side of the law, as your company grows.

Also, as a business owner, you’ll want to be aware of how your business is progressing. Audits are useful for highlighting inefficiencies and issues.

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