Fraud Prevention 101 for Small Businesses
The Association of Certified Fraud Examiners says that small businesses are the most viable targets for business fraud. There certainly are enough challenges in starting your own business; who needs one more? To that end, Fidelity Bank of Florida, your community bank in Merritt Island, Melbourne, and all of Brevard County, offers the following tips to avoid fraud affecting your small business.
- Background Checks: First and foremost, do background checks on all employees. Word of mouth recommendation, friendship, and even blood relation do not eliminate risk for damaging behavior by an employee. Make sure your potential employees’ references check out and verify all past employment and educational claims. Too often, employers don’t invest the time and effort at this stage, but it’s certainly worth it in the long run.
- Stay Alert: Keep your eyes open and don’t make it too easy for fraud, abuse, or theft to occur. If you have valuable inventory, keep track of who can access it and when. Consider digital locks and inventory-control systems that require workers to log in with an employee-specific code so that if something goes missing, you can tell when it disappeared and who accessed that area of the building or that storage device. If advanced digital systems are not within your budget, you may want to install a video monitoring system with a rolling recording of the premises. Such a purchase could easily pay for itself over time.
- Make ethics a priority. While you don’t necessarily want to create a prison-like environment by posting signs stating that theft is grounds for termination, you can encourage ethical behavior in several ways:
- Model ethical behavior to your employees. Treat them fairly and honestly. Don’t let them see you blurring the line between business and personal use of company resources. It is your company, but you easily can send the wrong message.
- Treat your customers and vendors fairly and honestly. Your employees will notice this as well and it can have a major impact on their behavior.
- Pay your employees on time. This should be one of your highest priorities. When payroll is late, employees may view that as you stealing from them. Whether or not you agree with this point of view, you don’t want your employees to have that feeling.
Fraud cannot be prevented 100% of the time in any business, large or small. But if you take the time to do a few things differently, you may be able to greatly reduce your risk.
Fidelity Bank – your community bank in Merritt Island, Melbourne and all of Brevard County – is happy to be a resource for your small business. Contact us today at 321-452-0011.