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10 Ways To Protect Your Business From Fraud (Nasir Khan)

10 Ways To Protect Your Business From Fraud (Nasir Khan)

Fraud is indiscriminate. It does not matter if your business is big or small, profitable or barely breaking even; fraud can happen to anyone.

There is no ‘one size fits all’ approach to protecting your business from fraud. Each will have certain elements that will need to be accounted for. List below are 10 anti-fraud methods that each business should ensure its adhering too.

1.  Know your employees:

This may sound simple, but it is amazing the number of businesses who do not run background checks or contact a reference of a previous employer. Background checks are an inexpensive first step to safeguarding your business. This will alert you to any dishonesty in a potential employee’s background and make your decision about their future at your company.

2.  Know your customers:

This can be vital. Always request a form of identification, and always make sure you are paid for your services. For example, a business who sells building supplies; the fraudster will make lots of small orders, always paying promptly. This is the fraudster building up a relationship with your business so later, when a larger more expensive order is placed and the fraudster asks for extra time to make payment, the business is more likely to agree as they believe they have a professional relationship. As a result the business has been defrauded.

3.  Get active in company finances:

Don not just leave this to the accountants. Acquaint yourself with the books. Check and get to know your monthly incomings and outgoings so that you are able to spot any discrepancies quickly.  

4.  Change passwords regularly:

Changing important passwords every so many months can really improve the security of your business. Make sure passwords are completely different and not just a variation of older passwords, as this can make systems very easy to hack.

5.  Individual ID’s and passwords:

Each employee having their own computer/security ID lessens the risk of an internal fraud; fraudsters never want to use their own ID to commit a crime. If a crime is committed, it is then easier to trace where the security breach came from.


6.  Limit who has full access:

If all your employees have access to accounting and banking information, you are increasing your chances of internal fraud. Only provide access to those who absolutely need this, or in any event limit the levels of access that employees have. As above in point 5, if there is a fraud, you will be able to see which ID was used.

7.  Educate:

Educate your employees in recognising the tell-tale signs of fraud. Encourage them to watch out for suspicious transactions, catching a potential fraud in its early stages can save precious time and money.

8.  Avoid signature stamps:

A signature stamp is like a free pass for fraudsters. Always sign cheques/purchase orders personally. Again, this is also a good way to track your business finances so that you can see what is going out of your business bank account.

9.  Regular impromptu audits:

This is essential, especially if you ever have reason to believe that a fraud is being committed internally. By conducting random spot checks on your company finances, this not only acts as a major deterrent for any potential fraud but this will also allow you to quickly deal with any discrepancies spotted.

10.  Internal procedures

Make sure your internal procedures are rigid. Especially, when dealing with security issues and those that involve making and receiving payments. Make sure that staff are aware and understand your procedures, and lay down any consequences of not following the correct procedures.