There are many types of fraud that can affect large or small businesses and can go on undetected for long periods of time. Fraud can severely impact long term on a business’ reputation, revenue and health and, potentially, survival. The impact of fraud can cause far reaching harm to the people employed within a business.
Its customers and the industry in which it is based. In extreme cases, fraud within business can even impact on a national economy.
No business is too small to be at risk of fraud and often smaller businesses are more vulnerable due to less safety measures being in place, less vigilance, lower level technologies and a more relaxed or trusting approach to employees and even clients.
There are various forms of fraud that can be harmful to a business such as financial fraud, scamming, internal theft, identity theft and employee compensation fraud.
Financial fraud comes in many different forms: embezzlement which involves the person who is in charge of the business’ funds uses those funds illegally, such as an accountant spending it on purchases for himself; Payoffs or kick backs enable individuals working within the business to use their position to gain information or other benefits for people outside the organisation in exchange for payment;
Skimming involves an employee taking money from customers or other sources of income and not recording this but pocketing the funds for themselves;
Money laundering is when an individual who has access to funds and control of funds, such as an accountant or director, puts illegitimately earned money through the company to make it legitimate and places the business at huge legal risk in doing so.
Scamming occurs when an external company or individual offers to provide a business with a product or service that they are not able or qualified to provide and which either does not ever manifest following payment or is not as described.
Businesses fall foul of this type of con or fraud in such situations as purchasing updated equipment or seeking consultancy services.
Internal theft involves employees stealing from within the business such as office equipment, technology, stock or any other supplies they have access to. This can go undetected for long periods of time and cause a business additional expense over long periods.
Identity theft can happen when employees have access to business computer records and files, and financial documents such as bank statements or accounts which they can use themselves to steal the business’ identity to access credit.
Another form of identity theft occurs when an employee uses the good name and reputation (as well as potentially its stock and resources) to provide a service independently to customers, keeping all of the revenue for themselves and risking the business’ reputation at the same time as stealing custom.
Employee compensation fraud relates to staff members making claims for compensation or for sickness pay on a dishonest basis; they may be exaggerating the extent of an injury that occurred in the workplace to obtain a pay out or falsely claiming illness or disability so that they can continue to be paid a wage whilst not having to actually work, or working elsewhere to obtain a second wage.
The best means of dealing with fraud in your business is prevention; acting to safeguard and protect can stop the far-reaching impact of fraud damaging the people, revenue, reputation and health of your business.
So how can you prevent fraud from harming your business?
Important to fraud prevention is robust knowledge and vigilant monitoring of your employees, suppliers, customers and assets; these are the people that you open your business up to and are vulnerable to, and the stock, capital, facilities and credit that your business holds.
Background checks and screening on employees is vital during recruitment stages; whilst taking someone’s word for their history, experience and qualifications and accepting the reference providers they propose is a good way to build working relationships it places your business at risk and it is vital that you gain an objective and external oversight on someone before you allow them access to the systems and assets within your business.
You need to also know who is supplying your business with stock, supplies and services; overpricing will cost your business massively in the long run; if a company that you are paying to provide your marketing, advertising or website designing are not acting as agreed or don’t have the skills and knowledge to provide the service a business can lose out on custom and reputation; if a company is supplying you with substandard stock or materials this can cost your business custom and reputation again and may even land you in legal battles.
Customers can harm your business by not paying for goods or services that have been provided on credit, by paying through fraudulent means such as stolen credit cards or through the use of identity theft of another individual or business. It’s important to check payment means and to be thorough in your background checking before providing any client with credit.
Business assets can range from customer information, to stock, properties and financial holdings. You need to keep a constant and all knowing eye on all assets and ensure that employees or others who have access to these are not misusing them or abusing this access.
Breaching of customer or employee data could result in a very significant fine and legal action for the business.
Misuse of assets can cost a business heavily both in terms of finances and reputation and therefore custom. Robust recording systems need to used and there needs to checks and balances within this such as making sure that not only one person has oversight of an asset or funds to prevent any fraudulent activity from going undetected.
Surveillance equipment is a clear preventative measure within business premises, sites and offices; this is visible to employees and clients and acts as a deterrent for any illegal or inappropriate activity This also allows any queries or concerns around, for example, missing money or stock to be immediately looked into and evidence provided to ensure that a stop is put to this quickly before it develops into a significant issue for the business.
If, however, preventative measures have been unable to stop fraud from affecting your business (such as in a matter of a false employee claim for sick pay or ongoing theft from the business that you have been unable to evidence or attribute to a particular individual), an effective solution is to engage the services of a professional corporate investigation agency.
Private investigators are able to undertake covert surveillance, advise on specialist surveillance equipment and technology, undertake background checks and access data and records pertaining to an individual that are not in the public domain; this is invaluable in identifying and irrefutably evidencing the source of any fraudulent activity, enabling you to address it before it impacts on the long term health of your business, damaging reputation, custom and revenue often beyond repair.
Professional private investigators also act within legal frameworks to ensure that any legal challenge to a disciplinary or dismissal action that occurs as a result of uncovering the culprit(s) of the fraud affecting your business cannot stand. The evidence provided by a private investigator will also support civil or criminal action against the person(s) concerned if this is also something you choose to pursue.