Helpful tips in preventing employee fraud at your business

Research has shown that small businesses are often more vulnerable to fraud than their larger counterparts because they have fewer employees. Companies with fewer employees tend to have less segregation among duties, fewer internal accounting and auditing controls. Smaller companies develop closer relationships and trust between owners and their employees which can cause them to be less suspicious and thus more susceptible to employee fraud.

Small businesses can protect themselves by making employee fraud prevention a priority. The following guidelines are elemental steps in creating a fraud prevention environment in your small business:

• Implement an accounting solution as part of your fraud prevention.
• Understand your company’s specific fraud risks.
• Conduct employee background checks.
• Control the bank statements.
• Use only approved vendor listings.
• Centralize payroll check distribution.
• Create a fraud policy.
• Train your employees in fraud prevention.
• Conduct routine and unannounced checks on high risk areas of your business, including the financial and inventory departments for vulnerabilities and possible fraudulent activities.
• Make employees go on vacations.
• Implement direct deposit which reduces check handling.
• Use Positive Pay, a service that matches the account number, check number and dollar amount of each check presented for payment against a list of checks previously authorized and issued by the company.