Fraud is constantly in the news. Stories of multi-million and even billion losses due to fraud are commonplace. Ponzi frauds seem to crop up daily and you can be sure that for every one reported there will be a dozen that are not! Be aware! Fraud can impact small companies in many different ways!
For some reason many people think of fraudsters as attacking only big businesses and the rich or the greedy. Multi nationals are clear targets for determined fraudsters, and wealthy individuals can be criticized for having more money and greed than sense for investing in”too good to be true” high yield investment schemes.
However, fraud can impact the lives and businesses of us all. This is because of two very important factors – fraud is easy to commit and the vast majority of people are complacent when it comes to protecting themselves from financial loss. Yet, if you begin to look more closely, a huge number of ordinary people are affected by fraud every day. If you ask a room full of people how many have had their credit cards used by crooks it is surprising to see 10 – 20% hands being raised. If you ask a small business if they have been targeted by bogus charity publishers for entry in a useless “good cause” directory you will likely hear that they have succumbed.
Many small businesses have too few staff members to allow proper division of duties in their money or finance departments, a basic fraud prevention control – thus you may find one person able to make orders, approve an invoice and pay the bill. As soon as an owner takes his eye off the ball, such a staff member who is short of money may be tempted to start paying himself some more. And the owner’s response if he is lucky enough to discover the fraud – most likely that he trusted the long term employee and is surprised to be let down so badly.
A common adage says that 10% of the population have a criminal mind while a further 10% are truly honest. The rest, some 80%, will steal if the opportunity and motive arises. The point is that if somebody is short of money, perhaps they need funds to put their children through school or college, you would never put them in a room alone with a pile of money!
Fraud can impact small companies and they are just as vulnerable as large ones, and are often less able to recover from losses if they occur. Small businesses include Internet marketers, professional consultants and small personal services companies. These are targets for the “mass fraudster” who can steal identities (leading to credit card fraud for example) from a large number of victims, taking only a few $100s or $1000s from each one. Such associations can result in smaller losses – but the long term problems can be immense. Credit ratings can be ruined and this can sometimes destroy a small business.
The message to all is to be alert. Fraud CAN impact small companies! Be on the lookout for the fraudster and protect your business. Not only is it good practice to be in such close control to stop any theft but also to maximize profitable business performance so making more profit.
