Over the year’s cases of corporate fraud involving very large, publicly traded businesses make big news. Every day Small businesses are targets of fraud and deception even if the amounts aren’t newsworthy.
Here are steps that can help keep businesses away from the courthouse and detect fraud before it eats into profits.
- Set clear standards. One of the best ways to safeguard a business is to set clear standards from the beginning. An employee manual can be helpful in establishing the company principles and values.
- Check employee references. When hiring new employees check references and perform background checks that include employment, credit, licensing and criminal history.
- Secure your organization. Put systems in place to guard blank cheques from being stolen. Monitor the cheque numbers and have systems to double check payments. Using numbered checks enables you to audit for missing cheques.
- Never sign blank cheques. All disbursements should be reviewed on a regular basis. Scrutinize cheques made out to suppliers you don’t recognize, made out to cash, and missing cheque numbers or appearing out of sequence.
- Safeguard payroll. Payroll is another area subject to abuse. Small-business owners and managers should take the extra time to review every payroll personally.
- Control who reviews sensitive documents. Small-business owners should control who first receives the bank statements and other sensitive documents. This helps eliminate the possibility that someone intercepts the mail for the purpose of stealing or covering up an earlier theft.
Every year millions are lost from employee fraud and theft. Often small businesses are targeted because they haven’t taken the time to put systems in place to prevent it. Smaller companies also tend to put too much control in one person’s hands and over years tens of thousands or more can be siphoned off the top without a noticeable impact on the business. Simple checks and balances will help you maintain law and order.