Small businesses are vulnerable to fraud and because there are too many priorities to think about, the company’s level of security has to take a backseat. Aside from investing in high levels of security, there are also other practices your company should follow to reduce the risk of fraud. There are many types of fraud that a small business may face. Fortunately, there are ways to avoid or at least minimise them.
Shared passwords increase the risk of fraud. Setting clear boundaries decreases the likelihood of fraud. A code of ethics may be difficult to follow for small business owners. If expectations are not properly set, it will be difficult for you and your employees to draw the line. Boundaries do not only protect you against fraud but your employees as well. Putting rigid policies in place will prevent instances in which you say one thing and enforce another. A code of ethics also take you in the right direction in the event matters are taken to court. When you have encountered breach of agreement, the first step you will take is to document it.
A bookkeeper can keep things organised, but this does not mean that you will no longer actively participate in reviewing reports. Being hands-on allows you to prevent oversight. If transactions are not authorised, the reports will clearly show where your business is headed. Deposits, invoicing and even outside audits must be properly verified. In the long run, you will be able to uncover fraud or even prevent it from taking place as your employees are fully aware you are also doing a personal audit.
It is not easy to hire employees especially for small business owners. A basic resume can be peppered with impressive descriptions to win the nod of employers. References are important as it enables you to know a potential employees work ethics. Before you consider hiring an applicant, the conversation must be enough for you to gauge their character. More due diligence is essential if the job requires additional responsibility.
It takes a lot of hardwork to run a small business successfully. Fraudulent transaction is one thing to worry about. There are even businesses that discover fraud when it is already too late. Aside from breaking up essential tasks, setting clear expectations is also important. Violations of polices must not be tolerated so employees know you are serious about implementing stricter rules.
Peter Broberg is a bookkeeping professional with over 20 years experience in the finance sector. With more than 2 decades of experience, Peter provides payroll and bookkeeping services on a professional level. His services cater to small and medium enterprises in Cannington, Kalamunda.