While many small business owners may think that fraud prevention and detection is reserved for large companies who have millions of customers, the fact of the matter is that all businesses should take it very seriously.
Fraud can harm a small business as much as a large one and can have detrimental consequences that you may not be able to recover from.
In fact, it may be even more important for small business owners to take fraud prevention seriously. When you are starting out, you can’t afford to lose customer confidence, and nothing can ruin that confidence as quickly as security breaches or other types of fraud. Here are some ways your small business can watch out for fraud and protect your customers confidence.
Have a clear separation of duties
Large companies with many employees often have their many tasks separated by departments and individual employees within those departments: accounting may handle all of the financials, but there are some people who work on payroll and others who keeps tabs on revenue. This is a good practice that helps prevent fraud — both intentional and unintentional.
This can be a problem for smaller business who don’t have that many employees, but the separation of duties should be established as best as possible.
If you only have three or four employees, then obviously it can be a real struggle: not everyone is qualified to perform the necessary tasks that the separation of duties would require.
If you can, however, have at least three or four people in a department handle different tasks so that there is a built-in checks and balances that can help prevent fraud.
Too much information in the hands of one or two employees can be a dangerous situation, so make sure to use all of your employees wisely.
Run internal security audits
An easy way to stay on top of your company’s security is to have your security audited every so often to make sure it is SOC Compliant. What is SOC Compliance?
It’s an official report that will evaluate your business’s internal security and consumer confidence so you can find any problems and fix them before they get out of hand.
Having an SOC audit lets your customers know that you have all of the proper systems in place to avoid possible fraud. It also helps you identify weaknesses and may offer possible solutions to any concerns you may have.
A third party will come in and evaluate your company for you, compiling a report that you can then use to your advantage. It can help you streamline your system and close any gaps in security that may lead to fraud.
Have oversights and reviews in place
Small business owners can be so concerned with the big picture of their company that they forget to pay attention to all of the small, day-to-day operations that keep it up and running.
While it’s admirable to keep an eye on the overall health of your company, if you fail to oversee the small things, you run the risk of fraudulent acts happening and damaging your reputation.
The right oversights and reviews can help you maintain that consumer confidence. You should make sure that each employees has someone above them that can answer for any mistakes that may be made. If you are a new or very small company, this duty may fall upon you.
If you have the employees for it, set up a hierarchy that monitors the employees and can check their work whenever needed and report to you. It is, after all, your company, so you need to stay current to all situations.
Watch the user access
Many times, employees may have more access to the company systems than is needed to perform their jobs. This can lead to dangerous situation where an unethical employee can get information that they can use to commit fraud.
Make sure that the IT person in your company understands all of the information that each employee needs to have access to in order to do their job correctly and nothing more. This will prevent employees from gaining access to higher-end information that they do not need.
Make sure to review your employee’s access every so often to see whether they have access to too much or too little information and then you can adjust it accordingly: You don’t want to hamper them, but you don’t want to grant too much access, either. Set a few internal controls for your business and you can help prevent fraud.
This post was written by Leah Knowles. Leah works for an IT firm in security operations. A geek at heart she enjoys gaming, writing tech related articles as well as spending time with her family.