Did you know that fraud is more likely to occur in a small business and more likely to emerge from within? While a large corporation has the budget to secure foolproof fraud prevention software and tools, the newer startup may not know where to start when protecting themselves from falling victim to fraud. There are several reasons a small business is more susceptible to fraud.
Fewer anti-fraud software systems in place
Small Businesses do not always have the financial resources to invest in the up-to-date software necessary to prevent fraud. Although they typically install some sort of accounting software, it may lack the functions and advanced technology that a big corporation can afford to use.
Fewer staffers to hold accountability for each department
The small business also has fewer employees in each department. For example, a single employee in charge of accounting and bookkeeping is much more likely to make a mistake and even steal when they do not have the accountability of a larger team. There is no team in place to audit or check. More responsibility and trust are placed amongst the staff in a new or smaller business.
There is also nobody available to audit or check the work of other employees.
Employees more prone to embezzlement
It is called embezzlement when an employee takes money from the company and keeps it as profit for himself. Usually, this employee is experiencing financial or emotional strain at home. To make more money for the family, a trusted employee may feel pressured to misuse funds. Or perhaps they have developed a habit of supporting and taking from the company seems like his last resort.
Another characteristic of an employee prone to embezzlement is one who feels entitled or underappreciated. Make sure to constantly communicate with your employees so that you can develop a professional relationship with them and identify clearly their roles, expectations, and consequences.
Conduct thorough background checks and make sure you continue to know what is going on inside and outside your company doors.
WARNING SIGNS!!!!!! These 5 Warning Signs may Suggest your Employee May be Activiely Committing Fraud.
Watch out for statements or accounting registers that don’t balance. With outdated software and no auditor, you run a higher risk of overlooking dishonest behavior in the workplace. Make sure that you look into accounting errors. Especially if accounting is done manually, there is more likelihood for an honest mistake, and this fact can be used to an embezzler’s advantage.
If you have employees who suddenly begin spending a larger-than-life amount of money, this could suggest that something might be up. Take a closer look at what your employee’s average take-home salary can provide in terms of needs and wants. If they are indulging in lavish spending beyond their fixed income, they may be involved in corrupt business activity.
Working odd hours
Employees who suddenly begin reporting more overtime and who is leaving the office could be either stealing time from the company or staying late to do something illegal. Do not let employees take advantage of a flexible schedule if it results in higher risks and opportunities to commit fraud.
Unfortunately, the statistics point to the fact that small businesses are prone to fraud. Whether it is your trusted and experienced senior vice president, the newly onboarded assistant manager, or even your family member hired on temporarily for the summer… Anyone can slip through the cracks.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.