It’s not just the big end of town that suffers from financial fraud and errors - it’s also all-too common in small and medium businesses too. In some regards, they’re even more vulnerable than their bigger cousins!
Unlike big business however, small and medium businesses don’t have the ability to absorb the consequences as easily. Many small businesses suffer from cash flow problems, meaning fraud or errors can put them in a precarious position.
If you ask us, the best way to deal with it is to avoid it altogether!
But first: what is fraud?
Errors are self-explanatory. But what about fraud?
According to the Australian Institute of Criminology (AIC), fraud involves using “dishonest or deceitful means to obtain some unjust advantage”.
For most businesses, fraud takes the shape of employees working finance stealing company cash and other items. Compared to theft, fraud is usually done by intentionally creating fake payments, accounts, and revenues.
And unlike run-of-the-mill theft, it’s a lot harder to guard against fraud, especially since to the untrained eye, those extra expenses can look 100% legitimate.
To avoid fraud and financial errors, business owners need to guard their business finances. Here’s how...
Tip #1: Don’t let one person do all your bookkeeping
We understand that you’re very busy managing your business. You want to avoid overworking yourself… not to mention, you’ll also want to avoid micromanaging everything.
Of course, when it comes to avoiding financial fraud or errors, sometimes all it takes is an extra bit of oversight.
If you have bookkeeping experience or training, make a habit of periodically going over your business finances yourself to review, verify, and track certain accounts and financial matters.
It doesn’t even have to be you if you’re overworked. Any employee that knows the bookkeeping essentials can help detect fraud and discourage staff that might have the wrong idea.
Tip #2: Use an accounting software
When it comes to fraud and errors, one of the best ways business owners can guard against financial issues is by using accounting software.
Cloud bookkeeping platforms such as Xero and MYOB can help business owners identify problems early, and can even help you avoid problems altogether.
The way bookkeeping software protects you against errors is self-explanatory. Platforms such as Xero and MYOB sync with your various accounts, invoicing software and production system. This ensures 100% accuracy.
A lesser-known advantage is their ability to easily identify any suspicious activity.
The good thing about using cloud accounting software is that it tracks manual inputs and edits. Depending on the settings you choose, you may receive an alert every time a transaction is manually entered, as well as a record of the edit and the editor.
Tip #3: Implement stricter internal controls
There’s an idea in the bookkeeping industry that fraud needs 3 things to occur:
Internal controls are all about removing opportunity from the equation.
This can include simple things like:
- Mandating sign-off from a witness
- Adding a password to your bookkeeping software
- Putting the bookkeeping computer in a highly-visible spot
- Having a second employee look over everything.
These are small things, but you’d be surprised how effective a little bit of accountability can be!
If you are unsure about process implementation, get help from a bookkeeping provider like Maximum Business Solutions. We’ll help you assess your current controls and plan, strategies, and set up more secure processes.
To find out more, click here.
Tip #4: Hire an external bookkeeping provider
If you are too overwhelmed with the task of checking, verifying, and monitoring all financial activity your staff are involved in, then hiring a bookkeeping service in Melbourne might be the best choice.
Outsourced bookkeeping services put you in touch with a bookkeeping expert with years of experience and training under their belt. Furthermore, bookkeeping is our raison d'être - that means no other tasks to distract us.
All of this means you can say goodbye to bookkeeping errors.
Additionally, professional bookkeepers are subject to a professional code of conduct. Not to mention, a reputable bookkeeper gives you frequent updates and statements, which you can check against your bank statements.
Guard your business against fraud and financial errors
Contact a leading bookkeeping service in Melbourne!
Maximum Business Solutions is a bookkeeping services provider that specialises in helping small and medium businesses regain control of their business accounts.
We do this without compromising security or accuracy, giving you the freedom to manage your business without the fear of errors or fraud hanging over your shoulders.