It’s no secret that small businesses have a higher fraud rate of employees being prosecuted for fraud and being the victim of fraud than larger companies and non-business owners. That is because they are the most susceptible to attacks due to their failure to take time to implement measures and internal policies to prevent fraud.
Fraud can come from any direction. A frequent source of fraud is credit card abuse – largely due to business owners failing to take the time to thoroughly review their bills and the lack of having an audit system in place. Fraud stems from a general failure of security across the business, from inadequate cyber-security to failure to run background checks.
You can increase your security and give you and your business the best chance to avoid being a victim of some of the common types of fraud and cyber-crime by following these simple tips:
Protect Your Financial Information
Every business, from sole proprietors to employee-based firms, must make securing financial information their absolute top priority.
- Separate personal finances from your business. Segregating accounts keeps criminals from getting their hands on all of your money. It also makes accounting for tax preparation easier.
- Use your credit accounts wisely. Don’t hand over your plastic or your card number to employees or companies with which you don’t have a familiar relationship. Switch to online bill pay or make sure you store paper bills securely. Likewise, use a secure mailbox for receiving and sending bills. If you don’t have one, deposit your mail directly at the post office (this goes for any mail that contains sensitive information – you don’t want to leave it lying around in an unsecured mailbox).
- If you use online banking, monitor your accounts everyday for activity. Also, if you must share your account information, limit access to any online accounts to one, trustworthy person and frequently update and change passwords accordingly.
Secure Your IT
Businesses who wisely invest in creating a sound plan for securing computers, internet access and other proprietary information are smartly protecting themselves from fraud. This includes:
- investing in security software, including firewalls restricting internet access, anti-virus, malware and spyware detection;
- regularly backing-up proprietary information and securely storing it;
- using a dedicated computer for banking that is not used for social media, email or web-surfing;
- developing a password policy that changes on a regular basis, like every 60, 90 or 120 days, that requires complex safeguards (capital letters, sufficient characters, numbers, etc.)
Conduct Employee Background Checks
Fraud can come from outside or within. Basic pre-employment background checks, especially for employees who may handle cash, high-value merchandise, or be granted access to sensitive customer or financial data, is a must for any business. I have seen first-hand how a failure to conduct a simple background check can shake a company.
Educate Yourself & Your Staff
Trustworthy employees are your first line of defense against fraud. Train them on basic security threats and preventative measures. Create policies that guide employees on the proper use and handling of company information, financial data, personnel and customer information. Make them part of your team by communicating that their future employment depends upon keeping the business as secure as possible and that failure to do so will result in termination. Businesses that have zero-tolerance for failures may experience some employee turnover, but will be healthier and more secure in the long run than those don’t.
Of course, there may be industry-specific measures you can take depending upon your particular business, so you should consult an IT professional, insurance companies and your legal team to minimize your business’s exposure to fraud.