Fraud can lead to serious legal penalties, fines and reputational damage. Though many medium to larger companies can absorb some of this kind of adverse outcome, a case of fraud can be catastrophic to a smaller company. As the owner of a business, you do your best to hire scrupulous employees who can be counted on to a business’s needs and maintain due diligence. When one of those employees, or a group of them, acts in a way meant to defraud the company, the result can be incredibly damaging to business. This occurrence can cause both a loss of public trust and ruin relationships with business partners, investors and insurers.
Securing the interests of a new business
As the technology of business systems advances, so increases the avenues through which fraud can occur. It is vital for new and growing companies to understand their risk areas for fraud:
Management hierarchies: There are all sorts of reasons why an employee might be tempted to commit fraud. The diffusion of responsibilities in some corporate environments’ can make it easier for employees to separate themselves emotionally from the company when stealing. Though this is no excuse, it demonstrates the potential for widespread fraud within specific industries.
Company spending accounts: The presence of company credit cards or spending accounts can allow workers to begin incrementally with small instances of theft that can eventually lead to more considerable crimes.
Asset misappropriation: This type of fraud is one of the most common in the workplace. A worker may steal or misuse a business’s resources. Some examples could include direct stealing, falsified reimbursement claims and the theft of company assets.
Strategizing for a company’s future
Though the measures necessary to keep employees honest can have considerable costs, the advantages of avoiding a fraud case can significantly outweigh the short-term costs. There are a wide array of products available to businesses for compliance and discovery of unlawful practices. If you discover that fraud was committed, it’s vital to hold that employee accountable while protecting your business interests. Explore all the options available for rectifying this situation.