Did you know that the typical fraud case in a business lasts 12 months before detection and causes a median loss of $117,000? This is a sobering figure, but you can avoid becoming a victim by following safe business practices and being vigilant about watching for fraud. The week of November 13, 2022 is International Fraud Awareness week, which is a good time to take a look at your business security practices and make sure you are doing enough to safeguard against unnecessary harm. Below are a several ways to help keep your business from being defrauded.
- Review your accounts often. Most businesses review their accounts at least quarterly, but that isn’t enough to protect against business fraud. Check your accounts daily. Look for transactions that fall outside of standard business practices. The sooner you challenge questionable activity, the lower your risk of substantial loss.
- Train employees to spot scams. Internet scams, such as phishing, fake antivirus offers, and untrustworthy links are a frequent occurrence in our personal and professional lives. To improve your defense against fraudulent attempts, invest in a training program to teach employees how to spot and avoid scams like these.
- Don’t skip software updates. Firewalls and antivirus software can be the first line of defense against attempted criminal behavior, but not if they are outdated. A firewall can detect and stop malicious activity, while an antivirus program can keep computer viruses from spreading the infection throughout the organization. System updates often contain security vulnerability fixes that address newly detected software exploitations.
- Get to know your employees. According to the Kroll Global Fraud and Risk Report 2019/20, 39% of fraud stemmed from leaks of internal information. This makes getting to know your employees more important than ever. If you notice an employee living beyond their means, having an unusually close association with a vendor or customer, or being unwilling to share duties, those could be red flags.
- Separate accounting functions. By not separating accounting duties, you’re putting your business at a higher risk of fraud. Small businesses are especially susceptible to this type of fraud since they may have only one person who manages all activities associated with bookkeeping, client receivables, payment of invoices, and management of petty cash. Separate accounting duties by having at least two people handling financial tasks.
Companies lose an estimated 5% of their revenue annually due to fraud.
Occupational Fraud 2022: A Report to the Nations.
The good news is that fraud is being caught faster and causing less damaging losses today than it was 10 years ago in 2012. But obviously, safeguarding against and avoiding fraud altogether is the optimal solution. Here are some great resources with advice for businesses and consumers alike.
Consumer Fraud Prevention Resources: https://www.occ.gov/topics/consumers-and-communities/consumer-protection/fraud-resources/types-of-consumer-fraud.html
Identifying and Avoiding Small Business Fraud: https://www.ftc.gov/business-guidance/resources/scams-your-small-business-guide-business
Additionally, First Bank offers Cash Management solutions such as Positive Pay and ACH Positive Pay to protect you from check and ACH fraud. Learn more about our products and services designed to protect your finances.