A Look at SME Expense Report Fraud and How to Avoid ItEvery potential risk can affect your business negatively, but SME expense report fraud is a threat that can have a wide-scale impact on your profit, reputation and viability of your business. It can lead to financial losses — or worse, bankruptcy — when not prevented or solved effectively. To stay safe from this dangerous predicament, familiarize yourself with the different types of fraud that may affect over your company.
Types of SME Expense Fraud
There are different fraud types that can occur in your business, such as theft, forging, hacking, breaching, etc. Theft can range from petty theft (e.g. stealing office supplies and stock) to intellectual theft (e.g. property, patents, database and price list), while misuse of company equipment for personal gain can include the use of the company car, office tools and appliances.
Another type of costly fraud is document forging, where false accounting, fake financial transactions and receipt forging can ruin your cash flow. Lastly, illegal activities such as hacking, breach of compliance, money laundering and counterfeiting can put a stop to your business if you don't identify these problems early on in your company’s growth. While these fraudulent acts are widespread, you can still do something to prevent it.
Eliminating Fraud, Increasing Safety
To protect your business against fraud, you should have procedures and rules, which should come under the overall risk assessment policy of your company. This also involves knowing what you need to protect and identifying areas in your business that can be susceptible to fraud.
Communicating with your staff is important to reduce the risks of internal fraud, and all departments in your company should not only know but also comply with your code of conduct. Filtering the good from the bad starts with pre-recruitment procedures that can be added to your risk assessment strategy. You should also do regular checks, especially for sensitive positions in finance and accounting. This can range from monitoring their performance as well as keeping an eye for their behavior and opulent lifestyle.
Aside from your staff, you should also watch out for your business partners: clients, suppliers and subcontractors. Doing a background check on the nature of their business and their reputation in a market is a good step to ensure they are solvent. Carefully study their offers and discuss it with your executive team before you enter into expensive and crucial business partnerships.
The most important measure for protecting your business from risks such as fraud is to get a regular audit led by an external accounting company to get an unbiased review and risk assessment of your company. Accounting outsourcing services enable you to see the bigger picture to reduce internal and external threats on finance, stock, logistics, etc.
Getting your company checked through solid procedures and audit can identify threats at every part of your business and provide recommendations that you can implement to fully protect your company's assets and standing. Fight business fraud by taking action today.
Protecting your business from threats doesn’t have to come with a hefty price. Contact us to learn more about affordable yet dependable outsourcing accounting services to secure your business from damaging risks.