Financial criminals will commit fraud in some form every 15 seconds in the UK. No matter what size your business is, from the small clothing specialty shop to an independent restaurant, there are multiple areas in which scammers may find vulnerabilities that can negatively impact your cash flow and devastate your business if left undetected. Fortunately, there are also multiple means of tightening your security to prevent this type of financial fraud.
VPNs and Division of Labour
Preventing fraud from outside sources begins with securing your data. Employing the use of a VPN will increase your overall security by ensuring that any external users accessing your data centre are authorised and using a properly encrypted channel. This prevents unpermitted access that results in outside theft and loss of assets. Unfortunately, fraud can often come from the inside in a number of forms as well. Cash and asset misappropriation, for example, is probably the greatest internal security threat. To prevent this kind of activity, you should separate accounts receivable and receiving cash receipts so they are not reliant on one employee (division of labour). By dividing duties among employees, ie, one prepares deposits and another makes the deposits to the bank for example, discrepancies (both accidental or purposeful) become easier to recognise and remedy. Internal control procedures should centre on securing your company’s assets.
Separate Bank Accounts and Hold Expense Audits
Financial transactions fall into one of two categories: business or personal. Protecting your credit and bank accounts is a prominent means of reducing the risk of fraud, so first and foremost, you absolutely must separate the two types of accounts. Not only does this make expenses easier to track, but it also helps to reduce mistakes, and more importantly, it guards you from losing all of your assets. If someone steals from one account, they don’t have access to the other, thereby saving at least one of them. To ensure transactions on the business account are legitimate business expenses, consider conducting surprise audits. This adds yet another layer of protection against fraud by ensuring all expenses are approved and accounted for.
Even with modern technological advances, it’s difficult to completely safeguard your business from every single threat. What you can, and should, do in addition to as many precautions as possible, is to minimise the possible damages that fraud may incur. Talk to your bank about what protection you already have in place, if any, and what options are available; ask what they can and can’t do in the case of fraudulent activity on your business account. Finally, consider purchasing a business insurance policy that will protect you against these types of losses. Sit down and discuss your needs and concerns with an insurance company to find the plan that’s right for your business.
Knowledge and preparation are your best allies against business fraud, whether internal or from outside the company. Apply as many of these options as possible to protect your company, and in the case that something sneaks through, have a plan to mitigate your losses so your business can quickly recover.
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