4 actions small businesses can take to prevent fraud & embezzlement

By Hannah Whittenly

While protecting your business against outside criminal threats is a necessity for any business owner, securing your company against threats from the inside can be a trickier affair. It requires respecting the privacy and boundaries of your staff while still keeping an eye out for your bottom line and the integrity of your business. Taking a few precautions can help secure your company against risks of fraud and embezzlement.

Perform due diligence

Criminals thrive when there’s a lack of oversight. If there’s embezzlement or fraud going on at your business, the best way to resolve the problem is to identify the issue before it gets out of hand. Thorough and periodic financial reviews can be one of the best ways to make sure your finances are on the up and up, and the more frequently you perform your reviews, the easier it will be to identify discrepancies. A review once a month should provide you with the insight you need to understand your books and spot any noticeable red flags in your finances. In addition, make use of any tools the government provides to help protect your business property, such as the ppsr check offered in Australia.

Enforce vacation policies

Vacations serve as a release valve for employees, allowing them to recharge their batteries and come back to work refreshed. They can also serve as a sensible means for you to evaluate the behavior of your staff. Enforcing vacations, particularly among employees in charge of sensitive financial information, allows you to rotate responsibilities to new staff members. Having a fresh set of eyes on the process can alert you to any concerns in how your employees are handling their workload.

Institute checks and balances

Fraud can’t exist without opportunity. If you want to minimize the risk of fraud before it happens, build redundancies into your accounting protocol. Never trust your bookkeeping to a single employee, regardless of how much you may trust them. Instead, make sure that accounting duties are split between at least two people. This can help you avoid the threat of fraud while also reducing the likelihood of unintentional but still costly errors with your accounting practices.

Reduce chances of check tampering

Check tampering is one of the most common forms of business fraud, but you can stop the problem at its source by handling checks yourself. Always sign checks by hand rather than using a rubber stamp. Also consider handing out all checks directly. At the very least, make sure you’re the one to directly place them in the mail.

There’s no way to eliminate the threat of fraud completely. However, the right measures can help you minimize your risk and identify the problem before it becomes unmanageable. If you suspect criminal activities on the part of your employees, enlisting the help of fraud lawyers could be a smart decision.


Hannah Whittenly is a freelance writer and mother of two from Sacramento, CA. She enjoys kayaking and reading books by the lake.

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