All it takes is an opportunity.
That one moment when you aren't fully across everything or when your focus and attention has been pulled in all different directions.
Small businesses have a high risk of being vulnerable to fraud. As a small business owner, you may not have the proper processes and procedures that you need to have in place to prevent and detect fraud. You may not have even thought that you need to have something like that in place. Small businesses can lack the resources to internally check accounting systems, payroll or implement controls to prevent cash theft. This can become a massive financial loss that could potentially sink your business and along with it, all of your hard work.
Not only can the money going out with no explanation be a huge loss for your business, but if people find out that these things are happening, your customers may not have the same amount of trust and loyalty as they did when they first started coming to you. Banks may look at you as a risk and not want to lend to you.
Do you have set procedures in place when it comes to paying invoices or using petty cash? You may have one person looking after payroll, invoice payments and all online banking. This can open up that one opportunity for an employee to commit fraud. It doesn't just have to be that, it could be having employees claim the wrong expenses or misusing assets. All of this is costly for a small business and without having the proper knowledge and skill set, it may be something that gets overlooked.
Business owners are relying on delegating tasks and jobs to their employees. As the business grows you are further from the coal face. You are focusing on what you are good at, and not having time to focus on the other aspects of your business, you have to trust to have complete oversight of your business. Being passionate about what you do and trusting your employees is vital in small business. However, being aware that fraud could happen is also vital. Having those processes in place is not saying that you don't trust your team, just puts you in a position to never have to question that trust.
If your business doesn't have formal procedures in place you could be at risk. Your employees should have the tools and training to identify and prevent fraud. Having those processes, internal checks and policies in place are all methods that our Audit and Governance team are able to help you with. Being proactive and looking at the risks your business may be susceptible to will only help you to grow and develop your business.
If you need help with this, our Audit and Governance team are experts when it comes to identifying opportunities for people to commit fraud in your business, putting the appropriate procedures in place so that everything can be recorded and reviewed and helping you to enforce those policies in your business. We are here to help you make your business stronger and continue to grow long into the future.
If you think your business needs to look at your current processes and policies for fraud, contact us today.
This document has been prepared for general information only and is not intended as personal advice. Any statements of law or proposals are based on Forsyths' interpretation as at the date of issue. Accounting & business services are provided by Forsyths Business Services Pty Ltd ABN 66 182 781 401, liability is limited under a scheme approved under Professional Standards Legislation.