Even though challenges remain stemming from a global pandemic, small businesses are generally optimistic about progress and resilience. Outside of economic pressures, businesses need to be vigilant of other risk factors that can create a vast impact on their forward moving efforts. Impacts such as cyber-fraud, banking fraud, and internal fraud are risk factors where small businesses are especially targeted. Therefore, it is vital that small businesses take steps to deter fraud, and to detect it as soon as possible.
Minimizing the Risk Factors
Because of their size, many small businesses have one person that handles the bookkeeping functions such as client receivables, paying invoices, managing petty cash, and recording these functions in their accounting system. This type of set up makes it easy for fraud cases to go unnoticed. The handling of cash and accounting functions should remain separate, or better yet have the functions performed through a virtual CFO relationship with an accounting firm.
For any business with online activity, a cybersecurity plan is crucial to establish and follow. Institute basic security procedures for employees, including using strong passwords, protecting customer data, and other vital information. Update your devices with the latest security software, web browsers, and operating systems. Use antivirus software and firewalls.
Payment fraud is avoidable! Always be aware of the newest fraud trends, encrypt your payment transactions, and seek a partnership with a secure payment processor, such as Bill.com. This type of payment solution protects your banking information. It processes payments without ever accessing an online bank account. Always view your account activity and bank statements. Businesses should routinely audit areas that deal in cash, refunds, product returns, inventory management, and accounting functions.
Employee Fraud is a Genuine Risk
While every business strives to hire honest employees, employee fraud is a genuine and costly risk for small businesses. Simple changes on how you complete business may help eliminate the ability for employees to commit fraud. The first most necessary action to take is to go paperless. This reduces the ability for any unauthorized or ill-will individual to access your financial information. It also provides an easier way to track your transactions. Going paperless includes paper checks. Making electronic payments eliminates the risk of any account and routing numbers being shared with the wrong individuals.
It may be more practical to hire a professional accountant to perform your high-risk processes. CPAs and Certified Fraud Examiners can provide extensive help in fraud detection. At Redmond Accounting, we provide multiple accounting services and are experts in cloud-based accounting technology. We can improve your accounting process by helping your business pay invoices, get paid faster, and can help protect your small business from fraud. Schedule a consultation with one of our team members today to get started!
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