There have been numerous business frauds that made the news these past few years. One of the most recent ones involved the German automobile manufacturer, Volkswagen. Governments worldwide test vehicles to ensure that their manufacturers adhere to the set emission standards. Instead of simply following the rules, the company decided to create a diesel dupe that will change the emission results during testing. Their tactic was discovered in 2015, resulting in billions of fines and thousands of recalls.
Large corporations are not the only ones at risk of business fraud. Even smaller businesses can face serious consequences if they get involved in any type of fraud. Aside from losing revenue, your brand can end up with a tainted reputation that will eventually ruin your ability to do great business in the future.
Mitigating business risks is the first step in protecting your brand against fraud. You may find it easy to find a reliable team of corporate fraud solicitors in your area. But why wait for fraud to happen when you can always prevent this from happening in the first place?
But sometimes, brand owners lack enough planning and action that could very well protect their business against different frauds. Are you guilty of committing the following mistakes that increase your risk of small business fraud?
Poor Employee Recruitment Process
One common fraud involving employees is payroll fraud. This happens when staff finds ways to get a higher paycheck even if they don’t deserve this in the first place. They may try to lie about their productivity, take credit for a project they stole from their colleague, or try to add sales or overtime.
You may think you got your employees in check since you only have fewer people to handle. But payroll fraud is more common than you might think. You can avoid this by making the necessary improvements in managing and hiring employees.
Consider running a background check before hiring staff. Train your managers to track their staff’s performance and overtime. As much as possible, invest in an automated payroll service to avoid clerical error and only give access to the right employees.
Your brand processes hundreds to thousands of invoices each month. The large volume makes it easier for malicious individuals to use this to their advantage. Identifying the common types of invoice fraud and knowing how to avoid each one is a must even for small business owners like you.
Some common types of invoice fraud are CEO impersonation, false and duplicate frauds, shell companies, cash skimming, vendor impersonation, and non-delivery of products or services. To avoid invoice fraud, make sure the ones in charge of invoices will cross-check every invoice. Don’t let suppliers dupe your brand by running comprehensive background checks before you trust a new vendor.
Poor Business Data Handling
Even small businesses can get a hold of sensitive client information. Failure to protect your customer’s data can put them at risk for identity theft. This can negatively impact your cash flow, influence your brand’s reputation and even cause issues when it comes to your vendors.
To avoid identity theft within your business, here are some recommendations:
- Ensure all of your business computers have anti-spyware and anti-virus protection
- Educate employees about the different scams online
- Keep browsers and software updated with security patches
- Protect your network with a firewall
- Regularly check your business credit report and report unusual activities
- Enroll in a credit report monitoring service for regular inspections of activities showing signs of fraud
Poor Return Policy
If you sell goods, then your business can be a victim of return fraud if you don’t have a strong return policy in place. Some customers may choose to buy one of your offers, use and return them even if there is nothing wrong with the product. Others might attempt to steal some products and return the items in exchange for a refund.
You can prevent return fraud from happening by having a strong return policy indicated on your website and the product packaging. You want to make sure that the customer can provide the right receipts before you can consider the refund. It also helps that you state a certain amount of time customers can return the product after the purchase.
Be sure to train employees about stricter return policies. Everyone should be aware of when your business can honor a refund or not. Of course, you also need to make sure that for every valid return, your customer’s experience will be seamless.
These are but four mistakes companies make that put them at risk for business fraud. If you are guilty of the items listed above, then it is high time that you make the necessary changes. Improve your business processes and policies to stop frauds from happening within your organization.