Jonesboro, AR – (JonesboroRightNow.com) – July 20, 2024 – Financial fraud is a top concern for businesses and banks. Small businesses are more vulnerable to fraud, and because they are such an important part of our community, Arvest wants to provide tips to help owners mitigate fraud. The content and tips presented here are from an Arvest news release on fraud.
According to the Association of Certified Fraud Examiners (ACFE), some of the most common frauds impacting small businesses are internal fraud committed by employees and external fraud that includes check and credit card fraud, vendor fraud, and cybercrime. ACFE estimates that businesses lose approximately 5% of their revenues to fraud each year.
“While fraud impacts businesses of all sizes, it can cripple a small business already operating on thin profit margins,” said Chad Harbison, Community Bank Lender for Arvest-Jonesboro. “Just one instance of fraud can make any financial loss potentially devastating. It’s important for small business owners to prioritize fraud prevention measures to safeguard their assets, maintain credibility and ensure their success.”
Harbison offers a few proactive measures small businesses should consider incorporating to help mitigate financial fraud.
Protect your bank accounts.
If you haven’t created separate bank and credit card accounts for your personal life and business, you should do it now. If hackers gain access to one account, they won’t have access to the other if they are separate. Keep a close watch on transactions. Ensure that checks and ACHs have the correct payee. Checks are known to get stolen from mailboxes or found discarded in the trash. Fraudsters can create a counterfeit check with the same serial number and amount and make it out to a different payee. Monitor your business expenses to make sure there are no unauthorized or fraudulent charges posted to your account. Check with your business banker about your bank’s fraud protection solutions for business checking and credit cards.
Create internal controls for spending.
If you have employees whose role requires the need to use a business credit card for expenditures, it’s important to have a formal credit card policy and a well-monitored credit card expense control system. Every employee who needs to use a credit card should be issued their own card. It’s also important to ensure that the card provider has quality fraud protection such as automatic alerts if an employee spends over a certain amount or there’s suspicious activity. Watch for phishing scams. If an email is received to change a payment, contact the vendor at the number you have on file (not in the email) to make sure it was them that requested it and not a fraudster.
Educate yourself and your employees.
Technology has allowed fraudsters to become more creative and deceptive in their attacks. It’s important to stay updated on common and trending fraud schemes so you and your employees know best practices for prevention. Provide ongoing training to help your employees recognize and prevent the most common types of fraud, both internal and external. You should also create a plan for how employees can report suspicious activity, so that it can be reported timely to the bank.