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Fraud fears: How to Protect Your Business on a Budget – 2024 Guide

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Combatting fraud is part and parcel of running a modern business, but despite the best efforts of regulators, enterprises and individuals, fraud remains a singular issue. Figures released by trade association UK Finance paint a concerning picture of recent trends, too, with an estimated £58 million lost to impersonation scams between January and June 2024 alone.

According to the Association of Certified Fraud Examiners (ACFE), small and mid-sized businesses are the most common victims of fraud. What makes this all the more concerning is that these are often ventures that can scarcely afford to take a loss and so it’s vitally important that they put robust measures in place to detect and prevent fraud. Fortunately there are lots of things that can be done to limit the risk of fraud, and some of the most useful are outlined below.

Make accounting a team effort

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Before you can start looking to protect against risks from the outside, it’s important to make sure that you’re running a tight ship. All business owners want to think the best of their staff, but it’s all too often the case that a rogue employee puts their employers and colleagues at risk. This is one of the reasons that formal procedures are so important, but it’s also the case that sensitive financial tasks should be conducted by multiple individuals to ensure oversight of the whole process.

When you run a small business, it can be tempting to let one person handle all of the bookkeeping functions from client receivables to managing petty cash and paying invoices. Whilst this might seem convenient, it makes it much easier for cases of fraud to go unnoticed. Unless and until you get audited, there’s a chance nobody will have any suspicion that something’s amiss. Make sure that at least two people deal with your business’ money and keep accounting and cash-handling roles separate.

Conduct an audit

Unfortunately fraud isn’t something that you can quickly patch up and you need to be proactive to keep your business secure. You need to know how your business operates, who it employs, what products and services it provides, and any legal and regulatory obligations it might be subject to.

Only by conducting a belt and braces review of your business can you fully identify and work on those areas where it might be vulnerable to fraud. Whether you’re dealing with potential anti-money laundering issues due to your clients operating from certain jurisdictions or if you just have a high turnover of staff, know your business, and know its customers. There’s no substitute for a keen eye when it comes to fighting fraud.

Scour your business account for irregularities

Source: starhub.com

This is perhaps the easiest fraud prevention tip out there, but it’s something that far too many business owners let fall by the wayside. With online banking, there’s no excuse not to be checking through your business account activity on a regular basis, keeping tabs on any irregular transactions.

Although it’s always a good idea to have a firm understanding of how your business receives and spends its money, keep an eye out in particular for any unknown payment recipients or payments made to businesses or personal accounts that you don’t recognise. Even letting staff know that you review your account activity could prevent any fraud attempts, and it won’t cost you a penny.

Be sceptical

When you’re in business, giving up an opportunity can feel like a complete waste of time and it’s often difficult to forgo any chance to get in on some profit. Despite this,  if something sounds too good to be true then it probably is.

Whenever you’re hearing a pitch from a supplier or have got a big deal coming up, be sure to question everything and leave no stone unturned. Taking just a little extra time to fully understand what you’re getting yourself and your business into could make all the difference and leave you better placed to pick out fraudulent activity or mitigate against any risks that might arise throughout the duration of a new contract.

Keep your computer systems secure

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It seems obvious, but there are plenty of businesses out there that simply don’t assign enough value to cybersecurity. Fraudsters and hacking often go hand in hand, and when your customers’ data is at risk there’s no excuse not to put rigorous controls in place.

From a firewall through to sufficient anti-virus cover, there can be no substitute for a thorough approach to data hygiene. It’s also worth making sure that your employees use strong, unique passwords that are changed on a regular (60-90 day) basis and that your files are backed up daily or weekly to an offsite server or datacentre. With these provisions in place, you’ll be ready to face cybersecurity threats safe in the knowledge that your data is secure.

Use reliable payment solutions

If you want to prevent fraud in your business, it makes sense for the whole transactional process to be watertight. For this reason, businesses should seriously consider whether their payment solutions are up to the task of keeping their customers and themselves safe.

Businesses that want to start as they mean to go on might consider a safe and secure payment solution from a reputable merchant services provider such as UTP Group.  If you take online payments, a PCI Level 1 Compliant, 3D Secure eCommerce payment gateway with DDoS mitigation and velocity checking anti-fraud controls could give you and your customers peace of mind. Similarly, a physical card reader with an integrated PCI PED approved pin pad will allow your customers to securely enter their pin with ease.

Fraud protection starts from the moment you take a customer’s payment or data, so make certain that you’re equipped to properly secure your transactional funnel.

Get sufficient insurance cover

Source: smallbusiness.co.uk

No matter how many precautions you take, no fraud prevention regime is infallible. Fraudsters are innovative and just as businesses begin to patch up vulnerabilities, they find new ways and means to slip through the net.

For those times when you simply can’t prevent fraud, insurance is essential. This will not only protect your business from harm, but will also provide some recourse for any customers who lose out to the same scam. Good accounting practices and cybersecurity are best-practice essentials, but sometimes going back to basics with an insurance failsafe is the best policy.