As a business owner, you must be aware of everything that happens within your business. But, you are only one person, who can’t be watching over everyone all at the same time. There is simply too much to do. So, how do you protect your business from the one thing that could destroy it faster than you built it? You know what I am talking about. Fraud. Whether you have internal fraud or occupational fraud, your business can be gone if you do not catch it quickly enough. 

Thankfully, I have a few tips that can help you recognize any fraud within your business before it spirals out of control. 

Steps to Take to Protect Your Business from Internal or Occupational Fraud

1.  Watch for Employee Red Flags

Employees are going to have their good days and their bad days. So, a slight red flag like an employee showing up late five days in a row may not be what you are interested in the most. The red flags I am talking about include employees doing a complete one-eighty and acting totally unlike themselves. An employee about to lose their home or entering bankruptcy can cause them to do the unthinkable and commit fraud to save themselves. 

It’s terrible to think about, but it happens more often than you think. And it is almost always going to be a person who has always been an exemplary employee in the past. 

2.  Always Reconcile Accounts Monthly

Reconciling accounts monthly and approving all exceptions should be something at the top of your list of things to do. This can allow you to catch fraud in the early stages. 

3.  Restrict Access to Financial Information

Only certain employees should have access to your business’s financial information. And fewer people should be authorized to sign checks, make payments to unauthorized accounts, and hand out cash payments. 

You should also have a system in place to review all check request documentation. 

4.  Outsource Your Bookkeeping

Hiring an accountant is one of the best ways to catch, or avoid internal or occupational fraud. If you don’t want to hire a person to do your books each month, you can at least hire someone to complete a financial audit for your business. They can catch discrepancies that might be linked to fraud faster than you can. 

5.  Perform Background Checks on All Employees

It may seem strange to run a background check on potential employees. However, isn’t it better to know which potential employees have committed a crime, especially fraud, in the past? Or at least being aware if they are having financial issues? 

Once you run a background check, you can always approach potential employees with the information to get their side of the story. Those who own up to their past mistakes may still be worth hiring. It is those who try to avoid their past altogether that may not be worth the trouble. 

6.  Utilize Separate Credit Cards for Each Employee

If you allow your employees to use a corporate credit card for all business purchases, it is best to give them each their own card. This will make it so much easier to determine who made what purchases. If you notice a charge that shouldn’t have been made on an employee’s card, you then know who to ask about it. 

Sometimes, it may be a simple oversight where they grabbed the wrong card out of their wallet for a personal purchase without realizing it. Other times, it could be the start of them abusing their privileges. 

7.  Train Your Employees to Recognize Fraudulent Transactions

All of your employees should be trained to recognize fraudulent transactions. This is especially true for those employees who have access to financial information. To make it easier for your employees to report potential fraud, I recommend creating an anonymous reporting system. This will ensure the person doing the reporting won’t be known as the office tattle-tale. 

8.  Always Investigate Every Potential Fraud Case Brought to Your Attention

It can be so easy to glance at a potential fraud case that has been brought to your attention and say that it can’t be true. It could be because the employee mentioned has been with your business for decades. Or because it is only a couple hundred dollars. 

Remember, small fraudulent charges can eventually turn into bigger ones. And those employees who have been with you forever could be experiencing a life-changing event that isn’t letting them think clearly. 

It is better to investigate every potential fraud case and find nothing than to let them go and find major concerns in the future. 

Do you need help determining if internal or occupation fraud is occurring in your business? Or do you need help with your books? Contact the office today to schedule a meeting.