If you own a company, you are juggling multiple responsibilities on any given day. You must work hard to deliver a quality product or service, keep your customers happy and ensure you can make payroll. It is a lot to manage, but you take pride in your business and want to see it thrive. However, you must also protect your business. And one essential way to do that is to prevent fraud.
When you read the news, you probably have seen horror stories about bookkeepers who have embezzled from companies, taking off with thousands or even millions of dollars and leaving the owners high and dry. You have probably also heard about competitors using unethical tactics to steal business. Some have poached logos and assumed identities of other companies.
So, how can you safeguard what’s yours? What follows are several key pieces of advice.
Check Your Cybersecurity
These days, hackers can do so much damage. With a few clicks, they can access your records and steal information. These actions can lead to identity theft, which can impact your profits and your reputation. Therefore, it is worth the time and money to hire a cyber-consultant or have a reputable IT person on staff. These professionals can put processes in place to prevent a cyberattack. They can also help you train your employees to recognize phishing, spam and other tactics that can harm your systems.
One of the best ways to keep your company safe is to hire the right people. Make an effort to screen potential employees before you welcome them in. Call their references and previous employers and do background checks. If they have a criminal background, it is critical that you know the details, especially if they will have access to your finances or your customer relationship management system.
Set Expectations with Your Employees
Let your staff know what your policies are for accessing and protecting sensitive information. Make it clear that you have an ethical workplace. Train them to understand what fraud is and how to recognize it. Encourage them to sound the alarm if they see something suspicious, and provide an anonymous reporting system to accommodate anyone who may fear coming forward.
When you organize your staff, ensure that no individual has too much responsibility. For example, have two points of contact for your CRM and financial duties. You could even implement a multi-person signoff process for payroll, expense claims, bill paying and other functions. This strategy will prevent one person from having too much access and operating under the radar.
Do Random Checks
Without any set schedule, take a look at your financials. For example, see if any payments are being made to vendors or other companies you do not know. Also, have your accountant do audits throughout the year. These “surprise” check-ins can detect any irregularities.
Regular time off can help prevent employee dissatisfaction and burnout. So, insist your staff members take their vacations and enjoy the time to decompress. In addition, when employees are out of the office for several days at a time, they cannot cover up any illegal activity, which will make it more apparent to you.
Pay Attention to Paper
While most records are kept electronically these days, do not be lax when dealing with physical documents. They can contain sensitive information that can lead to identity theft or other types of fraud. So, make sure your employees do not leave documents lying in plain sight. Instead, keep them filed, and shred them rather than just throwing them away.
Know Your Business Partners
You probably welcome the chance to work with other businesses, but use caution. Before you partner up, ensure they provide professional references, a physical address and contact information. Do your homework and learn who the owners are and how long they have been in business.
Have an SOP
When you operate a business, you need three professionals in your corner: a lawyer, an accountant and an insurance agent. Look to them for advice on keeping your business safe, and have them on speed dial in case of crisis. If you discover you are a victim of fraud or suspect that you are, have a standard operating procedure for notifying them and your bank. You will need to have damage control as quickly as possible.
Ask for Assistance
Being a small business owner can be exhilarating and rewarding, but it can also be challenging. As you build up your company and help it grow, take the necessary steps to protect what you are building. This involves being smart, hiring the right people and having the support of key professionals.
If you have questions about preventing fraud, do not hesitate to consult legal counsel. An experienced lawyer can look at your company and identify ways to make it safer. After all, you want to protect your employees, your customers and your own livelihood.
The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.