Protecting yourself and your business from fraud allows you to concentrate on what matters most: the success of your business. Running a business is a big investment. Any level of fraud, especially for a small business, could be costly and devastating. Small businesses tend to be more informal, with family-type environments and less checks and balances, thus leaving them more vulnerable to fraud and identity theft.
Fraud is such a widespread problem that the IRS is now using a whopping 183 identify theft filters to flag potentially fraudulent tax returns at processing, thanks in large part to a startling 2013 report by the Treasury Inspector General for Tax Administration. The report revealed that in tax year 2011 alone, more than 285,000 falsely obtained or stolen Employer ID Numbers (one could easily have been your company’s) were used on 767,000 electronically filed individual tax returns with potentially fraudulent refunds totaling almost $2.3 billion.
Types of fraud can include those involving goods and supplies, accounting, workers compensation claims, fictitious vendors, customers writing bad checks or returning items not purchased from your business, and electronic hacking and scams. The Javelin study reported check tampering, skimming, payroll and cash larceny schemes were twice as common in small organizations as in larger ones.
Setting up anti-fraud policies and implementing checks and balances at different levels of your business can help detect and deter fraud. “In order to stay focused on your business and alleviate downtime and cost associated with identity crimes, owners need to address fraud and identity theft with the approach of protecting themselves and their business’s sensitive information and finances,” says Pamela Judson, Cash Management Director with MidSouth Bank, which operates in Louisiana and Texas.
Here are 5 ways to help prevent and detect fraud:
- Conduct background checks and credit checks before hiring employees who will be handling cash or valuable assets.
- Limit access to sensitive information like passwords, account numbers, financial databases, etc.
- Encourage employees to speak up if they suspect fraud and consider setting up an anonymous fraud hotline.
- Conduct regular internal and external audits to review accounts and processes. Surprise audits increase the chances of detecting fraud even more.
- Divide employee responsibilities so that different people are performing accounting functions. No one person should have control or perform all of the financial calculations.
MidSouth Bank offers the EZShield Business Protection Program with an all-encompassing “secure, monitor, restore” approach to protecting you and your business’s sensitive information and finances. On-the-go access, password protection, daily internet monitoring, fraud alerts and discounted identity protection services for employees make up the benefits of this award-winning protection service. Learn more about MidSouth Bank and EZShield