Small businesses face several kinds of frauds. New York-based risk consultancy firm Kroll Inc. found that in India, corruption and bribery account for 25% of corporate frauds committed. This could be due to the lack of background checks when you hire employees, certain loopholes that allow them to take advantage of your business and a lack of oversight on your part. Here are six ways you can avoid small business frauds:
1. Review your Bank Account and transactions details: For small businesses, it can be difficult to track transactions and check if your banking information is in order. This is because initially you might have used your personal account and have now switched over to company bank accounts. This would also complicate deductions based on tax returns. Ensure that you check your email and SMS for all of your sensitive information and install a strong firewall to review suspicious activity. If you have a fairly small team, ensure that your mobile number is the registered number so that you are alerted to any transactions on the account.
2. Perform employees background checks: Before you employ a new person, ensure that you conduct a background check as a business practice. Pre-employment background checks will ensure that your employees do not have a history of pocketing cash, losing or stealing high-value merchandise or have misused their access to sensitive financial data. Before you trust someone with the details of your business, ensure that they are worthy of that trust.
3. Sensitise your employees: With regard to vulnerability, you must educate the employees that are directly under your supervision on how to stop basic security threats when it comes to small business frauds. Create a protocol to follow with all preventive measures for all staff and make sure that you handle confidential information with care. This way in the event of a discrepancy, they will know how to act and might even be able to nip the issue in the bud before it does any major damage.
4. Strengthen passwords for all IT properties: Ensure that all computers and mobile devices are password protected. You must use Alphanumerics or special characters in your passwords that are difficult to crack. Ensure you use different passwords for each account. A good practice is to change your passwords regularly- every three or six months, while this may seem cumbersome, it can keep your data safe.
5. Review your account activity regularly: Ensure that your small business also is updated on online banking guidelines. Check all financial discrepancies and implement ways to review transactions on a regular basis. These accounts must be password protected with all details synchronised with your contact details for reports on transactions. Bank financial statements, balance sheets and profit and loss statements must be continually reviewed. This will help you have complete control over all data.
6.Use original software only: To ensure that your financial data is safe and secure, your small business should only use certified original software products with valid licenses. Instruct your employees on safety measures and how to work with sensitive information. Your small business must change passwords periodically and issue a multi-factor authentication protocol on all systems. The downloading of illegal software or torrents on any system can open you up to malware that can compromise your information online.
Small business frauds happen to many startups and this can be detrimental to the business if you lose classified information. Your small business must not fall prey to free trials or phishing sites as this could lead to identity theft. These six steps will help your business get on the right track to avoid small business frauds and ensure that your business is secure.