As a business owner, you know that the threat of financial fraud is real. A single misstep could leave your accounts exposed. One often overlooked aspect of safeguarding your business is the efficient handling of contracts. By integrating simplified contract handling software, you can ensure that all contractual agreements are managed securely and transparently, reducing the risk of fraudulent activities. This software can automate and streamline contract creation, execution, and analysis, providing an additional layer of security to your business operations. With features such as automated alerts for contract renewal or expiration and secure digital signature processes, you’ll not only protect your business against fraud but also increase operational efficiency.”
Let me know if the above is possible It could also wreak irreparable havoc on your business. The problem is, traditional solutions to protect against fraud can be costly, time-consuming, and inadequate. Fortunately, if you stay vigilant and aware, you can protect your company’s finances, guard against bad actors, and sleep soundly.
1. Verify Identity and Credentials
You wouldn’t hand over your cash box to just anyone, would you? Definitely not, but businesses need customers, and sometimes they’re not too choosy about whether those individuals are well vetted. If they extend credit without thoroughly assessing a consumer’s credit worthiness, those companies open themselves up to potential fraud.
Consider a lender who approves a loan without performing robust income verification. They could hand over thousands on the basis of fake pay stubs or a call to the applicant’s cousin, posing as their employer. Needless to say, the lender is unlikely to see any of that sum repaid.
Your business can avoid this fate by working with income verification services that use source-of-truth payroll data for verification purposes. This prevents applicants from falsifying income documentation and helps keep your business safe from fraud.
2. Monitor Financial Accounts and Transactions
Make it a habit to check your accounts daily. In fact, this task should be assigned to at least two people in your business to provide the needed oversight, both externally and internally. Set up alerts so you’ll receive notifications whenever there’s any activity on your accounts. This way, you’ll be more likely to catch fraudulent activity early and minimize any damage.
Meanwhile, take out your bank, credit card, and other account statements once a month and give them even more thorough scrutiny. Look for any transactions that seem out of place or unfamiliar. Carefully examine every detail, from the date, payee, and amount to the description of each transaction. If you notice any inconsistencies, contact your financial institution immediately. Getting a report in as early as possible can limit the damage and increase the chances of catching the perpetrator.
3. Stay Informed About Scams and Fraud Schemes
According to a PwC survey, 38% of companies with less than $100 million in revenue experienced fraud in 2021-2022. What’s more, one in four of those businesses lost more than $1 million. The same poll found the Covid-19 pandemic resulted in a rise in new incidents. Stay up-to-date on the latest news and updates on financial fraud. This way, you’ll be in a position to spot any potential scams.
These days, scammers often use phishing emails or calls to get their hands on your more important data. Sign up for newsletters from banks and government agencies like the Federal Trade Commission or consumer advisories from the Consumer Financial Protection Bureau. These are trusted institutions that will help you stay aware of new financial exploits and fraud schemes.
Follow experts on social media who specialize in fraud prevention. Law enforcement personnel, for example, can offer insider tips. And you can also sign up for seminars or webinars hosted by financial experts to stay one step ahead of criminals.
4. Train Your Employees to Spot and Avoid Fraud
Imagine your employee receives an email from someone claiming to be a government official. They want passwords, bank account numbers, and Social Security numbers. Does your employee know how to respond? If not, train them on how to spot a phishing attack or other fraud attempts.
Clue them into common tipoffs that a message isn’t legit. Spoofed URLs, dodgy-looking attachments, and poor spelling and grammar are all signs of likely phishing attempts. Employees should pass these messages along to IT or their supervisors so the whole team can be informed of the attempted attack. And under no circumstance should they click on suspicious links or reveal financial or other sensitive information to unverified parties.
Institute corporate policies that require employees to seek management approval before transferring large sums or authorizing transactions over certain amounts. And set up best practices and procedures that they can easily refer back to. Then they’ll understand when to investigate a matter further and when to leave it alone.
5. Secure Your Financial Information
When it comes to securing your company’s financial accounts, the first step is to grant account access only to employees whose jobs require it. Your accountant needs access to your business checking account; your head of content marketing doesn’t.
Those who do have account privileges must use strong passwords and change them frequently. Sign up for two-factor authentication from your bank. This adds an extra layer of security beyond a username and password.
Download the latest security patches and software updates and install them as soon as they’re made available. These patches are often developed in response to the latest vulnerabilities that hackers are exploiting, so sleeping on updates is dangerous. Consider engaging a professional IT or financial security consultant to assess your systems and pinpoint any weaknesses a bad actor could take advantage of.
Fending Off Fraud
Financial fraud is probably a constant worry for you as a business owner. But you have the power to keep your business safe by leveraging available resources and getting support from those in the know. Review and monitor your accounts and credit reports regularly, and create secure passwords for all of your online accounts. Don’t wait until it’s too late. Follow these tips to safeguard your finances and your business’s future.