According to the Association of Certified Fraud Examiners, businesses around the globe lose 5% of revenue earnings. That might seem like a little amount but over time, it will add up if a company doesn’t fix its issues.
It is also estimated around 3.7 trillion dollars is lost globally. Not to mention the damage to the company’s reputation if fraud does occur.
Once fraud occurs in a business, they must let their customers and clients know their data is at risk. If they don’t, the company could be fined if they have not reported it.
There are many types of fraud a company could be a victim of. As a company owner, you must be conscious of the different types of fraud which can occur.
Payroll Fraud
Payroll fraud can occur in many different ways. Payroll occurs when an employee lies about the number of sales, how many hours they work and how productive they are.
Sometimes, employees can go even further with how they scam your company. One of these methods could be an employee manipulating another staff member clocking in and out times for them.
Small businesses are usually affected by payroll fraud as they don’t have a system in place to deal with it. As a small company, how do you avoid this particular type of scam? Ensure you complete full background checks of the employee before they start working for you. Another way to ensure this doesn’t happen is by monitoring people’s time in the office.
Asset Skimming
Asset skimming is one of the more common business frauds on the list. Keep a lookout for forged checks or any missing inventory. Also, look out for business accounts that don’t add up.
Something else to be aware of is employees taking money from the company or off customers without recording the transaction.
To avoid this type of business fraud, ensure you rotate the staff who deal with the cash. Don’t put all of your trust into one cash handler.
Invoice Fraud Schemes
Invoice fraud schemes are another type of business fraud you must be conscious of. This type of fraud usually occurs with an employee that works in sales and or accounting. They will create fake invoices that will then steal money from the business. Invoices for products or services will be created by the employee that was never bought. They could also create over-inflated contracts with family and friends.
As a business owner, you must monitor all expenses which leave your bank account. This includes any transactions with a client or paying for an event. Monitor these invoices before you publish them.
Financial Statement Fraud
This type of fraud is usually to trick investors or the public to exploit a stock value and increase bonuses. This will usually occur in bigger businesses although it is very unlikely that this can occur. Nevertheless, this type of fraud can easily be avoided if you delegate different account functions to several individuals inside your company. Ensure you examine all financial statements for inaccurate information before you publish the document.
Financial statement fraud is very uncommon however, it can be highly damaging to a company’s reputation.
Although this type of fraud is unlikely, it can damage the reputation of your business, leading to a loss of money and damaging your company’s reputation. If it does occur to your business, you must get in touch with an investment fraud lawyer.
Tax Fraud
Tax fraud is another way your business could lose money. This is when both earnings and expenses are reported incorrectly to HM Revenue & Customs(U.K) or Internal Revenue Service (U.S). The reason why they do this is to take advantage of lower tax brackets and other exemptions.
To avoid this, you must ensure you file your taxes accurately and on time. Don’t over-report any company expenses or under-report your earnings for that quarter/ year.
Summary
There are many different types of fraud your company could be a victim of. You must incorporate a fraud reporting culture inside your business to prevent this from occurring. Additionally, encourage your employees to let you know of any suspicions they have.
Regular checkups of your company are a great way to prevent fraud from occurring. Furthermore, it allows you to find any suspicious employees that are putting your company at risk.
