Tuesday, April 23, 2024

How to Protect Your Business From Financial Fraud

Financial fraud is on the rise. According to UK Finance, more than £1.2 billion were stolen through fraud in 2022, and the majority of these cases started online.

Financial fraud affects not just individuals. Businesses have to be extra careful about employee fraud. A business owner who encourages or ignores the following can expect to pay the consequences down the line:

  • Putting too much trust in your employees;
  • Poor record-keeping;
  • Inadequate employee screening;

Some common business frauds include property theft, phishing schemes, commission fraud, and embezzlement.

Ultimately, vigilance is key, and there is no need to dedicate manual labor to prevent financial fraud. Criminals use technology, and so should you. It’s about identifying key pain points and eliminating or reducing them.

  1. Monitor Transactions

Even if hundreds or thousands of transactions occur daily, it is recommended to be proactive with fraud prevention. Checking the data post-facto could mean that you are too late.

On the other hand, implementing a transaction monitoring tool that detects suspicious behavior in real-time stops the fraud before it manifests. Even small businesses should have no problems investing in such software, especially when it offers so much value and serves long-term.

  1. Choose a Secure Bank

Online banking is the go-to method for payments and other transactions. Most banks provide multiple security layers, including tangible key code generators.

Whoever is in charge of the company’s bank account management must make the security tools imperative for everyone who uses the account.

Moreover, there should be a deal with the bank to flag suspicious account activity and contact the person in charge in such cases to stop fraudsters before they cause damage.

  1. Protect Devices

Malicious code infects not just computers; plenty of malware is dedicated to smartphones. It is a must to use antivirus software and install the latest operating system updates.

OS updates add more than just new features and general performance improvements; developers also push new updates to protect users from malware.

Having the latest OS version and an outdated version can be the difference between preventing a malware attack and suffering from it.

  1. Raise Awareness

You can expect to prevent fraud by raising awareness within the organization. Take a phishing scam, for example. A malicious actor might contact an unsuspecting employee via social media or email, tricking them into sharing sensitive information.

Most phishing scams are not that difficult to spot and ignore. Nevertheless, a fair few come with enticing copywriting from a seemingly legit source, and that might be harder to identify.

Regular employee training about the latest phishing and other cybersecurity risks takes resources, but the education can prove to be valuable beyond estimation if it leads to workplace fraud prevention.

  1. Check the Documents

A small business does not have that much paperwork, so doing a regular checkup should not be a problem. It becomes even easier if most if not all the documents are digitized rather than paper.

Regular audits can be used to confirm that the documents are all in order. Meanwhile, random audits by third-party auditors would serve as a means to show everyone that the company is no slouch when it comes to fraud prevention. The presence of certified fraud examiners is enough to deter potential thieves.

  1. Invest in Insurance 

While insurance is not a direct way to prevent fraud, it is a mechanism to get the losses in case of a fraudulent activity that could not be prevented via other means.

Be thorough about who you should pick as an insurance provider because different companies have different policies. Some might not even cover fraud-related losses. 

Conclusion

All in all, identifying and preventing a fraud scheme is not easy. Reluctance to implement the necessary means is common because businesses want to save money.

Unfortunately, being cheap can lead to even greater losses, so it’s better to take action and prepare well in advance

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