Do you know how to prevent fraud in your small business?

Did you know…

• 5% of businesses lose revenue to fraud and the average loss is $145,000
• It can take up to 18 months to detect fraud and most businesses that lose money, never recover it

As a business owner, you rely on your own employees to keep your business afloat – from interacting with customers, to invoicing and managing your accounting books.

Because you trust them so much, don’t you want to make sure you hire honest and trustworthy employees? It’s all too common that small businesses don’t uncover employee dishonesty until it’s too late and the financial cost of fraud has become significant.  

How can small business owners prevent employee fraud?

The key is to hire verified employees. By enforcing a few added policies and procedures you can help create a trustworthy environment in your small business.

Here are three ways to protect your business from fraud:

1. When hiring, always do a background check. A background check can give you a glimpse into the stability and decision-making skills of a potential employee. Their financial responsibility often mirrors their ethical responsibility.
2. Look for changes in an employee’s financial situation. You know how much your employee makes. If they suddenly begin living an extravagant lifestyle, this should trigger a conversation to see if perhaps they added a side job on their time off from your business or if they are potentially taking extra cash during their shift.
3. Divide up financial and accounting duties to create a system of checks and balances. Also, regularly have meetings to review financial documents and your business financial status.

Verifying that your employees are trustworthy is necessary to the success of your business. Have you ever experienced fraud as a small business owner? What tips do you have that help ensure you hire the best employees possible?