As a small business owner, ensuring your company remains safe is critical. Typically, small business is susceptible to fraudulent activities, which can cause financial losses and damage your reputation. You can take several steps to ensure the financial security of your business and preserve your reputation.
Small businesses must stay alert for fraudulent activities that may jeopardize their reputation and financial security. To ensure that your workers do not engage in any fraudulent behaviour, consider employing strategies such as internal control measures, conducting background checks, securing your data, and establishing a clear code of ethics that every worker must abide by.
Although employing these measures could help prevent any business malpractice, don’t forget the role of corporate investigation services. They can help you detect potentially fraudulent behaviour you may not have been aware of and suggest the proper measures to tackle them.
Here are six tips to help you prevent fraudulent activities in your business.
Tip #1: Employee Training and Awareness
Your first line of defence against fraudulent activities in your business should be educating your workers on ethical business practices. Tell your workers what you consider fraud schemes in your business and the significance of ethical conduct. This helps cultivate a culture of integrity in the business, preventing fraudulent activities.
However, suppose this fails, and it becomes difficult for you to recognize red flags that may indicate your workers are scamming their way into the business. In that case, you may consider involving corporate investigation services to conduct discreet investigations to unearth any fraudulent practice you may not know.
Tip #2: Set Up Reporting System
Sometimes, all it takes to curb fraudulent activities in your business is setting up a reporting system for workers to report potential fraud within your business. Studies reveal that most organizational fraud is detected because of tips from workers and customers.
To ensure this works effectively, create a safe environment, encouraging them to report these suspicious activities to designated email addresses anonymously. This way, workers planning to engage in fraudulent activities will know that others are watching, and they will be reported at any time.
Tip #3: Secure Your Finances and Data
Sometimes, all it takes to prevent fraudulent practices in your business is safeguarding sensitive data and your financial assets. Implement a secure payment system by employing encryption software and restricting access to only authorized persons.
If this looks like a tedious process to you, you can collaborate with corporate investigation services. They can help you identify any vulnerability in your financial security measures and recommend the right solutions to protect your financial data from any fraudulent threat.
Tip #4: Conduct Background Checks on Your Employees
Prevention is better than cure, they say. Before hiring any worker or engaging with any vendor, it’s good to conduct background checks. Conducting employee screening will help you identify previous instances of misconduct in their former places of work.
This way, you’ll be sure to employ only those with a good track record and who have never engaged in any business malpractice. This vital step would enable you to safeguard your small business from loss while cultivating a culture of trust and integrity, setting the stage for your business’s long-term success.
Tip #5: Establish a Clear Code of Conduct
Develop and enforce a clear code of conduct highlighting expected ethical behaviours that every employee must adhere to. It will guide every worker, ensuring they do not engage in any fraudulent behaviour in your business.
For example, if you operate a tech business, you may develop rules about keeping your client’s information safe and inform your workers that they must not share any client’s data outside the office and that doing so would lead to a termination of their employment contract.
Likewise, if you own a small business that sells different products, you can list core values about how your workers should treat customers. It could be something like always telling customers the truth about the value of the products and their prices without exaggerating anything. This ensures that employees do not engage in fraudulent behaviours such as trying to lie to customers to buy products, making your shop gain a good reputation for always being reliable.
Tip #6: Implement Stringent Internal Controls
To ensure that your business runs smoothly and that no one engages in fraudulent behaviour, set up internal controls. Two such controls are the segregation of duties and the dual approval process.
For example, instead of having one person handling cash and keeping track of your inventory, which gives them complete control, you can have one person handling money and another keeping track of the inventory. Implementing this minimizes the chances of a worker misusing their authority.
You may also insist that two different managers must approve certain decisions. This ensures that no manager makes important decisions alone, preventing any potential fraudulent practice.