It can do more damage to your business’ bottom line than unexpected utility price increases and even hikes in health care costs. But while most business owners fret about upticks in prices of commodities that they can’t control, they should be spending more time to ensure that their own offices, stores and practices are protected from fraud.

Your small, medium or large business can be vulnerable to fraud when employees have unsupervised access to money, products, financial instruments or customers’ and/or owners’ financial information.

Some types of fraud of which you should be aware:

  • Theft of cash register monies. If you have a “till” or cash register, the person who is collecting money can easily skim cash, especially if they have a way to bypass the system and not enter transactions prior to opening the drawer. Restaurants tend to be the most vulnerable to this type of theft but anybody who deals in cash is vulnerable to this type of theft. Without a tight accounting system and oversight, schemes involving customers and a person on the inside allow goods to change hands without being charged or entered into official sales receipts.
  • Check tampering. This type of fraud is becoming less prevalent, as fewer checks are being written. However, a typical check typing scheme involves the alteration of checks. We know of a case where an employer regularly wrote out checks to the “IRS”, which an unscrupulous employee altered to her first name, Priscilla. It took several months before the business owner discovered Priscilla’s misdeeds and she had skipped town by then and not surprisingly, left no forwarding address.
  • Ghost employees. A person who has access to payroll accounts can set up fake employees and have funds directly deposited to their accounts, all without the knowledge of business owners. Larger businesses are at higher risk for this type of fraud. Outsourcing payroll may not be a surefire preventive technique, as the payroll service won’t necessarily recognize who is a real employee versus a ghost employee.

There are a few ways to prevent and detect fraud. We will discuss these in next week’s blog.