27 Jul Simple solutions to put the brakes on business fraud
Fraud often flourishes because businesses aren’t proactive in protecting their assets. Often they will take those steps after a loss, but by then owners are merely covering themselves for the next occurrence. They’re potentially out whatever the thieves took and their peace of mind is, perhaps, permanently damaged.
According to fraud prevention experts, 10 percent of people among any group will never steal, 10 percent are inclined to steal and the other 80 percent could go either way depending on circumstances and opportunity. That applies to a business’ employees, its customers and the public.
Here are three fraud types common to businesses and some solutions to consider:
- Embezzlement – When you hire someone, you’re trusting them to do a job, do it well and do it honorably. But you should never do it blindly. No matter how trustworthy a person is, he or she should not have complete control over the money, writing checks and reconciling the books. Small businesses often have such an arrangement. That means the opportunities to steal money and hide the crime are higher. The thefts often are small amounts that add up to large losses over time.
- What you can do: Make writing checks and reconciling the bank account separate duties. At the very least, have an outside accountant audit the books periodically or annually.
- Check fraud – Those written checks you send in the mail have all the information criminals need to defraud your business, including your account number and an authorized signature. Forged checks can clear an account before any manual reconciliation occurs. The longer it takes to discover the fraud, the higher the probability that money could be gone permanently.
- What you can do: Be vigilant about checking your bank statements and flag any unusual activity or questionable payments. Most financial institutions, including Park National Bank, offer clients a way to review the previous day’s checks before they clear the account, providing protection if fraudulent checks are detected. Consider using electronic bill payments instead of checks. Shred all checks and statements you no longer need.
- Phishing scams – That email looks reputable, but it’s really an attempt to get you or your employees to send information or download malware or viruses onto your computer. That could open a criminal’s access to your banking and other financial information as well as other private details. Then they can use it to convince you they’re someone they’re not in developing more elaborate scams.
- What you can do: Treat all suspicious emails with extreme caution – don’t respond and don’t click anything. Call an organization to verify it originated from them. Be highly skeptical of emails with numerous spelling and grammatical errors.
When you take a proactive approach and use the proper financial tools and caution, you can save time and money without sacrificing your trust in others.
Candy Lehman has 31 years’ experience in commercial banking and accounting and is vice president of commercial banking at Park National Bank. She can be reached at 740.322.6830 or firstname.lastname@example.org.