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How To Protect Your Business Against Fraud
Fraud is always a popular topic in the business world, as it affects millions of companies a year. According to the 2012 Report to the Nations fraud costs $3.5 trillion worldwide!
Businesses need to be able to protect themselves from becoming a fraud victim, as it affects not only large companies but smaller ones too. According to the report, fraud can go undetected for up to two years; which is a very long time and could become very costly for a business no matter how big.
So how can businesses prevent fraud? There are no fail safe ways to completely stop fraud happening within your business; however there are a few things that can be done to help spot and prevent it from happening within your business.
Have Strong Internal Controls:
Make sure that you put strong internal controls in place in your Accounts Payable (AP) department to ensure that anything suspicious gets flagged immediately. Invoice fraud can happen at any time of the year, this can be in the form of duplicate payments, suppliers charging more than what you paid for, or paying for goods you haven’t even received or ordered. All these ...
... scenarios can easily go undetected if your business doesn’t have any controls in place to spot them. Analysing and improving your internal controls is one of the first ways to help prevent fraud from striking in your business, as it allows you to see areas where there could be potential loophole for fraudsters.
Implement an Invoice Automation Solution:
Invoice management solutions are specialised document management systems developed specifically to manage invoices and their corresponding documents within the finance department. The introduction of systems such as an invoice processing solution could narrow the opportunity for fraud, whilst also providing benefits such as:
- Increased visibility
- Cost savings
- Process improvements
- Reduction in process time and
- Increased accuracy
With an invoice processing solution you can enhance security by only allowing access to certain documents to people with the right level of security. This will allow AP staff to make sure the more important invoices are only accessed by those who have authority, rather than being seen by everyone.
Setting up approval rules in an invoice management system can also help to catch or halt non-compliant purchases, thus improving your chances of spotting fraudulent activity. Investing in an invoice processing solution can help to provide a business with the controls that wouldn’t necessarily exist in a manual process.
Cheque Protection:
Businesses today are still heavily reliant on cheques and according to a report by the Cheque and Credit Clearing Company, over three quarters (76%) of UK businesses still use cheques as a common method of payment. Although cheque fraud is decreasing, there are still numerous cases of this happening.
There are three types of cheque fraud commonly used in the UK: counterfeit, forged and fraudulently altered.
- Counterfeit cheques are manufactured or printed on non-bank paper to look exactly like genuine cheques and are drawn by a fraudster on genuine accounts held by the bank.
- A forged cheque is a genuine cheque that has been stolen from an innocent customer and used by a fraudster with a forged signature.
- A fraudulently altered cheque is a genuine cheque that has been made out by the genuine customer, but a fraudster has altered the cheque in some way before it is paid in, e.g. by altering the beneficiary’s name or the amount of the cheque.
To help protect your business from cheque fraud, try to regularly audit your cheques, frequently reconcile your bank statements and, although this may sound obvious, make sure you don’t leave your cheque book lying around, keep it in a secure place.
Fraud is a crime that will never completely disappear, but by putting preventive measures into your business, such as investing in an automated system, can help to detect and stop fraud from the onset. With many solutions out there, it is just a matter of choosing the right one that is suitable for your business.
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