Employee
theft is costly for businesses. Each year, billions of dollars are siphoned
away through business fraud. Knowing the crime schemes or scams impacting
business owners and methods to prevent them from occurring is essential.
Business owners spend a lot of time and resources protecting businesses from
numerous risks, whether it is in terms of liability for products or services or
more. But one thing that they often do not consider is the type of losses that
occur when business owners think they are immune from business fraud.
Business Fraud Scheme#1: Expense Reimbursement
Employees
may not submit extra expenses that have either never occurred or are not linked
to a certain business event. Employers need receipts for reimbursable expenses
and those pertaining to unusual categories of expenses should always be
questioned. Having a supervisor review expense reports before submitting for
payment can identify expenditures that are not warranted.
Business Fraud Scheme#2: Check Tampering
In this
type of business fraud, employees can use company checks to pay themselves when
they run checks or reissue uncashed ones in their name and cash them. Either
the owner or another accounting professional should be made to review checks
before they are signed. The review system makes it tougher for workers to
tamper with checks.
This
involves changing the amount on the employee's payroll check or creating
replicas of the check for cashing in more place than once. A manager or owner
should undertake the check review before duplications are considered.
Business Fraud Scheme #4: False Billing and Vendor Invoices
Business
fraud schemes such as false billing and vendor invoices are the result of bad
habits. Check that employees do not set up false vendor accounting systems.
This makes it easy for them to bill specific services or goods for the company.
One person alone should not be responsible for the accounting.
What You Can Do To Guard Against Fraud
Training
workers is an important part of guarding against fraud, such as fake invoice
schemes. You need to conduct background checking for every employee. Clear
accountability for each position in the company is a must. Establish a system
of checks and balances. Have a company suggestion box and guarantee anonymity
for workers reporting business practices that are suspicious. You need to communicate frequently to specify
a code of conduct for employees. Investigations need to be conducted to check
discrepancies as well.
Business
fraud can cost your company millions of dollars. That is why a system of checks
and balances is a must. It is essential to identify each project resources are
allocated to. Personnel should follow an employee code of conduct to ensure
that they are not violating acceptable rules. Business fraud can make a real
dent in profit margins and company credibility. Choose a fraud prevention
software and have preventative practices in place as well. A business fraud
makes for loss in profits and a damage of reputation too. Business partners and
employees should be carefully evaluated before your company associates with
them. In the case of business fraud, prevention is certainty better than cure.
