3 ways to protect against small-business fraud

You can guard against three common causes of fraud by adopting some good habits.

Improved cybersecurity is a great way to prevent against fraud.

As a security provider, you need to depend on your client’s payments to facilitate a consistent cash flow, trust your employees with valuable data and assets, and make sure your information is not manipulated by outside parties. You can guard against these three common causes of fraud by adopting some good cautionary habits.

The problem: Customer fraud
Inc. magazine said customers are responsible for about half the fraud perpetrated against small-business owners.

Payment fraud is one of the most common problems for any business. Sometimes customers try to pay with bad checks, stolen cards or plan to make payments using lines of credit they have no intention of paying. Sometimes these are honest mistakes, but the time it takes to fix the error can still hurt your cash flow.

Other forms of fraud are trickier. Customers may claim a service wasn’t performed properly when it actually was, or they will say they were injured by your company’s actions.

The solution: Billing software
You want information about problematic transactions as soon as they occur. Security billing software facilitates monthly payments from customers and provides warnings when financial information doesn’t go through or bills are late. Any issue that occurs is instantly recognized in the system and displayed for users before the business acts on capital that isn’t there.

Billing software also takes care of complying with Payment Card Industry (PCI) regulations to protect customer information. Working with the right technology allows you to accept the form of payment the customer is most comfortable with to prevent human errors.

Making central software available to all employees can resolve other consumer issues. Anytime employees engage in customer service, they can update their actions in a software log to create a data trail of customer interactions. If the client does claim poor service, there is a complete history of engagement.

The problem: Employee fraud
Employees are another common cause of fraud. Unsupervised workers may remove valuable equipment from your property or fudge the numbers in financial documents. The people who work in your business everyday are the ones who know the in’s and out’s of your procedures. It’s sometimes simple for them to use their knowledge for their unlawful personal gain.

You should try hiring people you trust. The U.S. Small Business Association advised performing background checks on every application. Even honest people make mistakes, however. Under extreme circumstances, employees who get the opportunity to perpetrate fraud might be too tempted to resist.

The solution: Constant audits
Segmenting tasks is a popular solution. You can prevent employees from having complete access to your company by giving each person specific duties. Assignments can overlap so employees have the opportunity to supervise each other’s activities.

You should use financial software for security companies to automate tasks. There’s no need for people to perform certain activities, and automated procedures will provide the same warning as properly implemented billing software.

A centralized software system is easy to audit. Every financial transaction should flow through the same platform so nothing is missed. Employees working with the software should be aware of how simple it is to detect a discrepancy.

The problem: Third-party fraud
Other individuals and organizations that try to defraud your business need to find a way in. People can hack into your information system through different channels. Misplaced documents or other paperwork can also provide account numbers or passwords that grant access.

You’ve probably seen a scam email in your personal accounts. If employees open fraud messages while utilizing the business computer system, they may allow criminals to corrupt your network or steal your information.

The solution: Prevention and education
Automated financial transactions cut down on paperwork, so there are less physical forms to be lost. Taking your business practices digital means you have to beef up your cybersecurity. Business News Daily detailed a few companies who lost information to cybercrimes and offered suggestions for protection. You should routinely change passwords, obtain security software that automatically updates and invest in encrypted wireless solutions to protect your small business.

You should also educate your employees about common causes of fraud. The FBI has a list of the most common schemes perpetrated online. Workers who are educated on Internet performance are your best defense to alert you to possible problems.

Is This You?

  • You've outgrown your software!
  • Billing & Collections is too time-consuming!
  • You have too many slow pay accounts
  • You need to automate your processes!
  • You enter the same data multiple times!