Boost Your Protection Against Business Fraud
As a small business owner, you’re working hard to build your company. It’s overwhelming to take care of everything at all times. Don’t get blindsided by fraud that can destroy your business’s finances and/or reputation. Protect your company from internal and external scams.
The 3 Little Pigs showed that the best defense is a strong house. Start making your business less vulnerable to fraud with internal procedures. There are 2 key policies that are often missing from new, small, and family businesses: money-handling and online security. These areas are completely within your control to fix as the business owner.
First, create sensible oversight and procedures around how your company handles money. Merchants Insurance Group found that unauthorized purchases and other credit card abuse are very common in small businesses. These practices will keep your money safe without restricting business operations.
Merchants recommends immediately separating your personal & business bank accounts. In the worst case scenario of a security breach, it “ensures fraudsters don’t get their hands on ALL your money.” In addition, separate accounts make it easier for us to accurately report all eligible business tax deductions.
Check your business bank account daily for suspicious activity.
Be mindful of who you give the card or account number to. Limit access to whoever absolutely needs this information in order to complete their primary job functions, like paying bills. Offer petty cash or reimbursement if an employee who isn’t one of these authorized users needs to buy something for the company. This is hard to say, especially in a family business, but you also need to know who you’re working with. Conduct employee background checks on all employees, especially those with access to sensitive information.
Switch to online bill pay to send money through secure portals.
If your company deals with cash, Entrepreneur warned about skimming by employees. They highlighted the importance of establishing “a streamlined cash monitoring process” with clearly defined roles and procedures to minimize how many people touch the money and how much cash is on-hand. Even a simple lockbox (that is locked with the key hidden) can deter internal theft.
Second, upgrade your Information Technology infrastructure and online security to protect your money and reputation from tech-savvy scammers. These investments and rules can build a safe around your online activity that hackers can’t penetrate.
Update all devices to the latest security software, web browsers, and operating systems. You should be using the best available tools for your business, including “firewall as well as anti-virus, malware, and spyware detection software,” according to Merchants. Secure Wi-Fi networks with Service Set Identifier (SSID) and password protection. “Backing-up is also a must and will make it a lot easier for you to continue working in the event of a cyber attack.”
Require strong, unique passwords for every sensitive account. In addition to accounts with financial information (like bank account or billing information), also remember to secure accounts where you communicate with customers (email, social media) or manage your business reputation (website, reviews). Yes, it’s hard to keep track of multiple passwords, but remember that the goal is to make it harder for thieves to access multiple accounts.
Create individual accounts for every user at your company to avoid password sharing and easily track activity.
Finally, your business is also vulnerable to threats from outside. Clever criminals try an endless variety of scams to get access to passwords, bank accounts, employee data, and other sensitive information. Like we said above about employee background checks, the Federal Trade Commission says to make sure you “know who you’re dealing with” when it comes to businesses. “Before doing business with a new company, search the company’s name online with the term ‘scam’ or ‘complaint.’ Read what others are saying about that company.” They also say to ask for recommendations from people you trust who have worked with that business.
Share this information (and more about protecting small businesses at FTC.gov/smallbusiness) with your employees and other business owners. Report scams against your small business at ReportFraud.ftc.gov. They can't resolve your individual report, but they “use reports to investigate and bring cases against fraud, scams, and bad business practices.”