The news headlines are quick to highlight a story involving an employee who has been caught embezzling. Understandably, this is unsettling news for owners who have invested so much time and money into their businesses. Although most employees would never steal from their employers, some may take advantage of a situation. So what can you do to help protect your business?
One way to significantly help reduce the risk is to have a separation of duties, which involves separating the roles of authorizing, processing, and recording financial transactions so that no single person is doing all three tasks. Not only does this help with fraud prevention, but it also helps reduce errors.
However, many businesses have a small office staff and can’t afford more employees, so what do you do then? Below are some tips business owners can do themselves to help prevent fraud.
Sign your checks or approve them electronically
Do not allow an employee to have the authority to sign checks or approve payments – that should be done by you or another trusted individual. Setting up a fraudulent vendor and paying fake invoices is one way fraud can be committed, so pay attention and ask questions when approving and signing.
Have your bank and credit card statements sent directly to you and REVIEW them
Statements should be sent directly to you electronically or by mail, and review them thoroughly. Look at the transactions and verify the check and deposit images included with the statement or online. Ask for receipts for credit card charges that look unfamiliar or suspicious.
Review payroll reports
Ask for the payroll reports and review them closely to ensure you know the employee names and verify they are still employed.
Verify outstanding AR balances and write-offs
Cash-heavy businesses are at risk when employees can accept payments directly from the customer. Have a paper trail for payments, and make sure you approve and verify customer write-offs.
Review reports and files
Review financial reports and ask questions. Technology today allows checks and invoices to be easily scanned and saved into a secure electronic file. If you use QuickBooks Online, the image can be attached to the transaction, saving time and file space.
The more you are involved in your business finances, the less likely you will fall victim to fraud.
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