As the economy begins to gradually restart as we draw closer to the end of this global pandemic, you may find yourself with a backlog of work. So much so that you and your employees are beginning to feel overworked.
“Easy solution,” you think to yourself, “It may be time to hire another employee.”
Before continuing, how extensive are your background checks when you hire someone? You may believe that hiring someone is an innocent enough process, but let’s think about how much trust is truly involved.
You’re letting another person into your circle and giving them access to potentially confidential information. You want to ensure that you are hiring the right person.
Why are we bringing this up?
A lot of business owners believe that strangers are the cause of any detriments or data breaches in their business, but that isn’t always the case. Sometimes the threats come internally.
The Association of Certified Fraud Examiners estimates that businesses lose 5% of their annual revenue to employee fraud and abuse. Small businesses are often more likely to be hit by employee fraud schemes, particularly businesses who have fewer than 150 employees. According to the U.S. Chamber of Commerce, 75% of employees have stolen from their employer at least once.
Being proactive and doing your due diligence is your best defense against internal fraud. Here are some tips to prevent it.
Tip 1: Know Your Employees
While every employer hopes to hire honest, hard-working employees, having a formal hiring process in place and conducting background checks helps prevent fraud. Background checks are important, especially when it involves a potential employee handling cash, managing payments or bank account information for your business or your clients.
Limit the amount of access you give to employees regarding banking information by permitting a select few to have access granted to those accounts. It’s important to trust your employees, but it’s not necessary to give every employee access to banking information.
Tip 2: Audits
It’s important for businesses to regularly audit areas that involve cash, product returns, inventory or accounting. Non-scheduled audits are useful in catching any potential malpractices before they get out of hand.
The Association of Certified Fraud Examiners offers resources to combat fraud, which is an easy and effective way to test your company’s fraud health. If you’re unsure of where to start for an audit, this is a great tool to see which areas need to be improved upon and corrected.
Ensure you know your numbers regularly as well. Reviewing financial statements on a regular basis, on a monthly basis if time permits, will send off alarm bells if the numbers go awry.
Tip 3: Direct Deposit
Encouraging your employees to receive their payment via direct deposit is not only convenient for them, but it is beneficial for you. Losing a paycheck could leave it in the wrong hands, where that person would have access to banking information and the potential to commit payroll check fraud.
Payroll fraud comprises 8.5% of occupational fraud worldwide and costs businesses an average of $72,000 per payroll fraud case, with small businesses getting hit more often than larger businesses.
Tip 4: Best Practices Training
Within the insidious realm of fraud, it isn’t safe to assume that all employees will behave the same way as you. Establish anti-fraud training for your staff annually. This would be a great way to address any concerns and outline the standards. It’s also a great way of letting employees know that you’re up to date on fraud schemes. Employees can’t feign innocence if you’ve outlined what is acceptable and unacceptable. Cultivate a company that promotes integrity by adhering to your company’s code of conduct and assuring that your employees know you expect them to adhere to it too.
Tip 5: Shredding Practices
While shredding documents won’t necessarily deter employees from committing fraud, shredding confidential documents and storing documents in a secure, lockable file prevents sensitive information from getting into the wrong hands, be it someone outside the company or someone within. At Document Destruction of Virginia, we provide lockable containers free of charge after every shredding service.
Document Destruction of Virginia has been offering document destruction services to businesses in West Virginia for years! To find out more about our services, give us a call at 1-877-338-3320.