8 Steps To Protect Yourself From Business Fraud

The following article was previously posted in the “Intuitive Accountant” by Renee Lacerte.

For small companies and accounting firms, fraud is becoming an increasingly big issue. The fact is criminals know that small businesses tend not to have adequate fraud prevention measures in place and so they particularly prey on these businesses. According to the Association of Certified Fraud Examiners, a typical organization loses five percent of its annual revenue to fraud, with small businesses disproportionately victimized. More frightening is the fact that it typically takes about 18 months before fraud is even detected.

And some fraud is even being perpetrated from within the company. For example, forgery can happen when an employee issues a check without getting proper authorization. When it is a bunch of checks written for small sums, it is difficult to notice what is going on and for money to just slip through the cracks. And that money adds up to billions of dollars lost by companies every single year.

It is for reasons such as these that more and more small businesses and accounting firms are moving to cloud-based financial systems. When you move to the cloud, you have a clear and easy way to track where funds are at all times. You can eliminate the need to print and mail checks and if you have no checks to write, then check forgery can become a thing of the past. Because you can access data from anywhere at any time from any device, you can always stay in full control of your money. Information is clearly power, and moving to the cloud gives accountants and business owners the power to see all the details of their cash flow in real time at any time. fig4

So, how do you get to such a secure place?

There are eight steps you can take today to protect yourself:

  1. Be aware. Identify key areas where your firm is most vulnerable and know who is accountable for each. Then establish internal controls to keep these possibilities from becoming realities.
  2. Go paperless. Every bill or check lying around the office is a security risk. Going paperless reduces the risk of manipulation and information theft. You can also get an audit trail showing everyone who accesses, views or changes a bill.
  3. Enforce separation of duties: Make sure that no single user can authorize, process and record financial transactions within the business. For example, an employee who enters bills should never be able to authorize the payments as well.
  4. Automate work processes: By automating bill and invoice workflow, you ensure that nothing falls through the cracks while limiting access to only those who need it.
  5. Eliminate checks (outgoing): A single check contains every piece of information needed to access your money. By eliminating paper checks, you protect your account numbers and avoid the risk of lost, stolen or manipulated checks.
  6. Eliminate checks (incoming): Receiving payments electronically protects against checks being improperly deposited. A cloud-based service makes it easy to pay and get paid electronically.
  7. If you have to pay by check… don’t do it yourself.  There are still times where you will need to send checks to vendors.  If you have to do it, use a service that sends checks on your behalf, hides your bank account information and provides positive-pay protection.
  8. Do an internal audit regularly. A cloud-based automated system makes regular audits much easier, creating an online audit trail with full remittance data, cleared check images and approval confirmations.

Quality Accounting Solutions can help The good news is that accomplishing all this can be much simpler than it sounds.  In fact, it’s nearly automatic when you move your accounting processes from the manual, paper-based world to the cloud.

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