Excessive transactions, suspicious financial activity, and irregular business practices are just a few of the many signs of potential fraud in a business. You might have concerns about a particular employee or worry that fraud has been happening under your nose for a long time. In either case, having the knowledge to detect fraud can be crucial. Uncovering fraud can be complex, but you can learn about some of the most common strategies below: 

Bring in Expert Help

Unless you’ve undergone training to identify fraud, there’s a high chance you won’t immediately notice it. If you have concerns, contact experts in the field, like certified financial fraud investigators. Such experts can undertake complex financial investigations, detect lies and discrepancies, and provide guidance on the actions you can take. Their expertise can be invaluable for identifying and solving fraud-related problems. 

Get Familiar with Your Employees

Many business owners think most fraudulent behavior comes from outside the business. However, internal fraud is common. A 2022 Global Economic Crime and Fraud Survey found that 57% of all reported fraud involved an employee. The more familiar with your employees you are, the easier it might be to spot behavior changes that might indicate fraud. Look for signs like: 

• An employee thinking rules don’t apply to them
• An employee being secretive
• Accounts receivable inconsistencies
• Employee lifestyles not matching their salaries
• Tips or complaints about specific employees

Awareness of these signs might mean you can identify fraud-related losses before they become too significant.

Understand the Different Types of Fraud

We saw many forms of fraud in the wake of the COVID-19 pandemic, like spoofing schemes, product cure scams, and phishing and malware schemes. These fraud types prove how many different ways your business can be at risk. Understand the different types of fraud so you can start implementing measures to reduce the risk. Employee fraud, in particular, can look like: 

• Theft: Employees steal resources, money, or property
• Kickbacks and bribery: Employees take money in exchange for preferential treatment
• Payroll fraud: Employees steal time by requesting hours they’re not present for
• Embezzlement: Employees or accountants in charge of your money steal it
• Benefits fraud: Employees defraud company benefits like using sick days when they’re not sick 

Implement a Fraud Prevention Program

Implementing a fraud prevention program may help your business reduce the risk of fraud. However, the measures inside a program may also make it easier to identify it. Separating duties is among the most effective ways to protect your business and make it easier to identify employee fraud.

For example, you might have multiple employees involved in the various stages of a business transaction. One employee can receive the cash, another can count and record it, and another can take it to the bank. You may then know at which part of the process there were discrepancies.

You may also like to enforce good recruitment practices by performing background checks to identify any history of dishonesty, theft, or fraud. A few measures may go a long way toward protecting your business finances and quickly identifying fraud.

As disheartening as it can be to learn that an employee might be stealing from you, it’s better that you know - and the sooner, the better. Take some of the above actions to potentially improve your chances of uncovering fraud before it has an even more severe impact on your business. 

By Adam Torkildson

Keywords: Business Strategy