Why Fraud Prevention Is Important For Businesses
A major concern for many businesses is ensuring that they are sufficiently protected against fraud and fraudulent activity – something that can seriously impact on their reputation and end up costing them large sums of money in lost revenue. However, it is something that many businesses forget to focus on, instead they put all of their time and energy into growth and financial success.
Fraud can be done by customers, competitors, third party groups, or even by members of staff, which shows that fraud can come from many directions, which is why businesses need to be careful who they share sensitive information / data with. In order to avoid cases of fraud from occurring, businesses should invest in fraud prevention. Manage your risk with fraud management and fraud prevention solutions from Accertify.
What exactly is business fraud?
Sometimes also referred to as corporate fraud, business fraud involves dishonest and / or illegal activities done by either individuals or businesses with the aim of gaining some sort of financial outcome for themselves.
When it comes to business fraud, there are several different types to look out for. These include the following things:
- Corruption – giving out or accepting bribes, nepotism, favoritism, and helping others to commit fraud are all acts of corruption.
- Financial statement fraud – falsely misstating financial data / information on a businesses financial reports is what financial statement fraud is. Businesses do this in order to make their situation seem more appealing to the likes of investors or managers do it in order to receive their sales bonuses.
- Asset misappropriation – this involves completing fake invoices or fake expense claims for financial gain.
- Payroll fraud – an employee or employees may tell untruths about the number of hours that they have worked when completing their timesheet in order to receive more money than they are actually entitled to.
- Identity fraud – this involves people stealing a part of an individual’s identity in order to access their finances.
How to prevent fraud
The best way of preventing fraud happening in a business is by investing in installing specialist fraud prevention software on all of the computers. Depending on the exact piece of software that is used, traffic light systems are used in order to alert managers or heads of departments of potentially risky transactions.
Another effective way of preventing fraud is by ensuring that all employees have a good working relationship with the business and can be trusted with money or potentially sensitive information. Not only will providing a good working environment for employees make them more productive and better at their jobs, but it also makes them much less likely to partake in any sort of fraudulent activity.
Laying down the law early sets a precedent that a business takes the act of fraud very seriously, thus putting people off of the idea of perhaps doing it themselves. It is important that businesses make their employees well aware of what the consequences of partaking in fraudulent activity is – this will stop them from doing it.