Fraud has become a big problem for businesses today, so let’s take the next few minutes to look at 7 ways to prevent fraud in your business. Has your business been untouched by fraud so far? That probably won’t be true for long. In fact, a recent study shows that the average small business loses roughly 5 percent (or $150,000) of its revenue each year to fraud. And in nearly 25 percent of the fraud cases the losses are in excess of a million dollars.
Part of the fraud problem comes from employee misconduct. However, there are many other factors to consider that could put your business at risk. Here are 7 ways to prevent fraud in your business:
- Have Separate Logins For Each Employee
If multiple employees share a single POS system it can be hard to track down the source if fraud occurs. You can avoid fraud by assigning a unique login to every employee for your POS system. It is also helpful to have a company policy in place against sharing login information. When each employee has a unique login, every transaction is clearly linked to one employee, which helps limit confusion.
You can also set up your POS system to automatically log an employee off if the system hasn’t been used for an extended time period. This practice forces all employees to verify their identity with the system regularly, which makes your system more secure against unauthorized access.
- Make Sure Your POS System is EMV-Compliant
The U.S. has recently implemented a new EMV (or chip-based) authentication system for credit cards. This move was to help limit credit card fraud. It also caused a change to fraud liability. Now, banks are no longer responsible for credit card fraud. Instead, merchants who select to opt out of using the new EMV system are liable for all fraudulent credit card purchases made in their place of business.
You can help protect your company from fraudulent credit card transactions by using a system such as QuickBooks Point Of Sale, which has an EMV-ready PIN pad.
- Complete Inventory Checks Regularly
It is also important to keep a watchful eye on your company’s inventory. Red flags include voided transactions, misplaced items or missing merchandise. You can keep track of your inventory by performing both scheduled and unscheduled inventory audits on a regular basis. These regular inventory checks will help you discover inefficiency and keep a better control over irregularities in the system. Plus, better inventory management will help you reduce waste and increase your bottom line.
- Have Clear Cash Drawer Policies
Another way you can help reduce fraud is to have clear policies in place related to your company’s cash drawers. For instance, all cash should be counted and recorded properly at closing each night. It would even be wise to have a system that requires multiple store employees to balance the cash and check one another’s work. This system will help create accountability and reduce human error.
- Train Your Employees
It is important that your employees are trained regularly on how to spot credit card fraud. When they know what to look for, they can help guard your company against fraudulent transactions.
Have regular meetings and training programs about compliance policies and anti-fraud efforts. Making your employees aware of the consequences of committing fraud will also make them less likely to commit fraud themselves.
- Implement A System Of Checks And Balances
Take the time to set up internal controls within your company. This will ensure that your employees are following the rules and regulations in place to prevent fraud. You can help further protect your company’s assets by dividing up the responsibilities amongst several different employees. Never allow a single person to be responsible for making deposits, reconciling the POS drawer, processing payments and handling petty cash. It is also wise to limit access to financial and physical assets, accounting systems and important documents to authorized employees only.
- Check The Work Of All Employees
The last of the 7 ways to prevent fraud in your business is to perform regular audits on the work of all employees, from the bottom all the way up to the top. Not only will this system help to limit fraud, but it will also help eliminate mistakes, miscalculations and losses, which all have an effect on your company’s profitability.