Recession fraud threat to small businesses on the rise

Small firms in danger of falling victim to rise in fraud sparked by the opportunistic and desperate as recession bites.

By News Desk
30th March 2009 at 17:35

Fraud Advisory Panel warns SMEsDifficult economic times tend to foster the criminally opportunistic and create desperate individuals within businesses who may try to take advantage of their position to deal with personal debt.

This is the warning released today by Ros Wright, former director of the Serious Fraud Office and now chairman of the Fraud Advisory Panel (FAP).

According to the FAP reported fraud against businesses has risen significantly over the last 12 months.

Ros Wright said:

Recession brings enormous pressures and it’s tempting for small firms to treat fraud as the least of their worries. But coping with the consequences of even a small fraud can consume huge amounts of time and resources which are already at a premium. Fraud prevention is an essential part of any downturn survival strategy.

Advice offered by the FAP for all small business owners includes:

  • Identify the areas of your business that might be most vulnerable to loss from theft or fraud, such as sales, stock, purchasing, expenses and record keeping and strengthen relevant procedures, including sign-offs for expenditure and expenses policies
  • If possible, designate a senior member of staff with responsibility for managing these risks.
  • Monitor your bank and credit card statements for unusual transactions and try to minimise cash transactions.
  • Ensure that your business premises have adequate physical security protection including locks, keypads and alarms.
  • Conduct checks on your suppliers, contractors and biggest customers and check invoices against original purchase orders and the goods supplied.
  • Check references for all new staff; full-time, part-time, temporary, and casual.
  • Adequately protect your IT systems and business information from the cybercrime risks posed by phishing, viruses, hacking and scams.
  • Ensure sources of credit and finance are properly authorised by the Financial Services Authority; or licensed under the Consumer Credit Act 1974 by the Office of Fair Trading.

All good, practical advice, albeit a subject that most small business owners will want to put to the backs of their minds.

Nevertheless, as long as procedures are communicated clearly, most staff should be more than happy to see the financial security of the business they’re working for is being protected.

[Picture credit: wwarby licenced from Flickr]

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