How to Protect Your Small Business Against Fraud

January
14, 2021

3 min read

Opinions expressed by Entrepreneur contributors are their own.

As a small business owner, you have many responsibilities to uphold to keep your company running efficiently. One of them is ensuring you have sufficient security measures in place to protect organizational and employee data from fraudulent scams. Unfortunately, online scams are becoming increasingly pervasive: as of 2018, 82% of businesses reported experiencing a form of fraud. While these findings indicated that large enterprises were at a particularly high risk, small businesses were not exempt from these attacks, which is why it’s more important than ever to protect your small business against fraud. Here are three steps you can follow to boost your security and keep scammers at bay. 

Educate Yourself

Knowledge is power. With this in mind, the first step in protecting your small business against fraud is to inform yourself of what types of fraud may target your enterprise. Some of the most common small business fraud scenarios include payroll fraud, cash theft, online banking, and false invoicing. It’s also vital to research the dire consequences such schemes can have on your small business. In many ways, fraudulent activity has the capacity to destroy your business. The financial losses are often significant, partners’ and clients’ level of trust in your organization are likely to plummet, and your company’s overall reputation could be significantly tainted. 

Related: I Went to Prison for SBA Loan Fraud: 7 Things to Know When Taking COVID-19 Relief Money

 Educate Your Staff

When it comes to defending your organization against fraud, your staff needs to be informed and involved in that process. Be sure to hold regular training sessions on common security threats (both online and offline) as well as prevention techniques they can implement.
Make sure all workers (both new and seasoned) are well-aware of the company’s policies surrounding the use and handling of confidential data, such as financial data, employee information, and client information. Failing to do so could lead to costly gaps in employee knowledge. For instance, if a staff member isn’t privy to what a phishing scam looks like, they’ll be far more likely to fall for one and jeopardize sensitive data. 

Integrate a Fraud Management System

Ultimately, establishing an effective enterprise fraud management system is the best thing you can do to safeguard your small business from scams. Enterprise fraud management (EFM) refers to the real-time screening of transactions activity across multiple company users, accounts, processes, and channels, to ultimately identify and prevent fraud within a business.

When selecting a fraud management system for your business, there are several criteria you should consider. Look for a program that will offer seamless integration, real-time analysis and results, and fits into your budget.

Related: Has There Been $1 Billion in PPP Fraud?

 In an age when online scams are becoming more prevalent, defending your company’s data needs to be a top priority. By educating yourself and your staff on the types of fraud to look out for as well as prevention and protection measures, you’ll arm yourself with the knowledge needed to strengthen your overall security. Additionally, integrating an effective fraud management system will provide you with the peace of mind you deserve in knowing your data is safe from scammers.