Fraud #12 Scope of Fraud on Small Businesses
Fraud impacts small businesses greater than larger businesses, why? According to the Association for Certified Fraud Examiners the smallest organizations (100 employees or less) suffered higher average losses than the largest organizations (10,000 employees or more). Small businesses losses average 25% - 30% higher.
Fraud is something that all business owners must deal with as part of doing business. Fraud tends to occur more in small businesses due to the level of trust, less formal setting, familiar with employees and greater areas of responsibility. Workers compensation fraud is higher in small businesses too.
Some of the following steps can help reduce fraud but will not eliminate fraud. A positive step is to tell your employees that you watching for fraud. This becomes a powerful deterrent. Each business can consider the following to help prevent fraud:
· Hire the right employees and conduct background checks
· Establish strong internal controls of checks and balances
· Establish procedures for approving expenditures
· Use security cameras to monitor cash areas
· Conduct surprise audits
· Provide a tip line for reporting fraud
· Enforce mandatory vacations
Implementing checks and balances will help prevent fraudulent activity. The more proactive approaches businesses can take are the best ways to reduce fraud.