Attention Vermont small-business owner. What measures are you taking to protect your company from fraud?
According to a 2010 report from the Association of Certified Fraud Examiners (ACFE), incidents of occupational fraud are 31 percent more likely to occur at small businesses as opposed to larger companies. To add insult to injury, as many as 40 percent of small-business owners are embezzlement victims, and a staggering one-third of all bankruptcies are the direct result of internal theft.
More alarmingly, a recent TD Bank small-business survey found that although nearly three-quarters of American small-business owners polled are incorporating some steps to protect their business, only one percent of respondents cite falling victim to fraud as a top business concern, even as cases of criminal fraud are on the rise.
Here are five proactive steps you can take immediately to help prevent fraud. Remember, the best defense is a good offense.
1) Manage finances using secure online banking. Banks and other financial institutions are at the forefront of developing and using security measures that help ensure financial information remains confidential and safe.
Online banking is a secure and essential tool for any small business owner. The benefits of this useful service include around-the-clock access to real-time information, account transfers and payment management.
You can easily schedule and manage your payments, submit remittance information, and have an audit trail of all transactions. It’s important to check your account activity regularly.
Having instant access to your history helps you closely monitor your accounts for any discrepancies. If you see any, contact your financial institution immediately. Many banks also offer free (and secure) online bill pay, saving you money on postage costs and mitigating the chance of a paper check being lost or stolen in the mail.
2) Protect computer systems and practice online awareness. Being complacent about cyber protection can lead to the compromise of critical information and detrimental consequences for your business. Every computer at home and in the office should have installed and regularly updated firewalls and anti-virus software.
When conducting business online, be aware of phishing, an electronic scam that attempts to obtain confidential personal or financial information from its target. It takes the form of a fake message, usually an e-mail, which appears to be from a financial institution or service provider. While some e-mails are easily identified fraudulent, including some containing enticing headlines, other may appear to come from a legitimate address. Never reply to any e-mail or pop-up message that requests you to update your information.
Given the influx of new digital technologies and operational tools available for small-business owners, it’s increasingly important to learn about the latest trends and techniques used by cyber criminals. If an offer received via e-mail or on a Website sounds to good to be true, it probably is.
3) Safely handle sensitive documents and financial statements. The Web isn’t the
only place where thieves can steal valuable information. Some of your own employees and outside parties can steal important mail, credit card information or checks and commit fraud.
Printed financial statements, social security numbers and other sensitive papers should be disposed of properly by using a shredder or saving them in a securely locked device. To avoid the hassle of handling several paper statements and receive online statements instead.
Technology advances have even put photocopiers at risk. Most photocopiers built since 2002 contain a hard drive that stores every image scanned, copies or e-mailed. When a business sells or upgrades their copier, the machine is usually cleaned up and reconditioned, but often times the hard drive is left intact and isn’t scrubbed. Once resold, it’s possible for anyone to simply pop out the hard drive and access and sell confidential information, such as income tax and bank records, social security numbers, and birth and medial records.
Treat documents in a standard office copier just as you would any printed document, and guard that information accordingly.
4) Obtain fidelity insurance. Crime and fraud-related losses generally aren’t covered by property insurance policies. As a result, it’s important to protect money losses from workplace fraud.
Fidelity insurance protects your business against criminal acts such as robbery, embezzlement, forgery and credit card fraud. Liabilities secured under this type of insurance usually include money-loss coverage (burglary or theft) and employee dishonestly (embezzlement and forgery).
According to the ACFE, 80 percent of workplace crime and abuse is performed by employees. Tough economic times often result in increased incidents of fraud and embezzlement. Although fidelity insurance means an additional cost for your business, it will save a lot of headaches should your business fall victim to workplace fraud.
Search for low rates, and partner with a broker who can help you shop for the best deal.
5) Incorporate appropriate checks and balances. Every small-business owner should perform an internal review and assessment of company finances on a monthly basis. Make sure payment amounts match all invoices, and check for any missing documents. Running random audits or having a third party audit your books once a year will show your employees you are serious about fraud and deter them from committing deceptive acts.
If you think you’re a victim of business fraud, immediately contact the fraud department of any of the three major credit bureaus to place a fraud alert on your credit file. Also, contact your banks, credit card issuers and other creditors where you finances and information are available. Visit www.tdbank.com/security for more tips.
Following these five preventive tips will help protect your finances and allow you to focus on the success of your business.
Phil Daniels is Vermont Marketing President at TD Bank