4 Tools That Help Prevent Fraud From Hurting Your New Business
prevent fraud
Globally, fraud causes businesses $3.5 trillion in losses each year. It is a major impediment to a healthy bottom line, and companies that fail to prevent or mitigate fraud do not last long in the marketplace.
There are proven ways to prevent fraud at the commercial level. Although eliminating all fraud may be impossible, severely limiting the amount of money that fraud costs in losses can be achieved through the use of several tools.
Here are four tools that can help prevent fraud from jeopardizing your business’s financial health.
Screen for Risk in Real-Time
Security software, much of it now powered by AI, can detect potentially fraudulent transactions before they occur by using advanced algorithms to detect irregularities and alert staff to scrutinize the transaction more closely.
This can eliminate many issues before they require more extensive (and expensive) intervention.
Identity Resolution
Identity resolution is a tactic used by banks and other types of businesses that seek to establish the identity of a client or customer who is applying for a loan or engaging in other businesses where the potential for losses is great.
To perform identity resolution, the software looks for similarities between information provided and historical data to determine whether fraud is likely being committed.
Perform Regular Audits
Most professionally certified accountants are trustworthy and take their duties as money managers seriously.
They understand their fiduciary responsibility to the company and do their best to carry out their work with the highest amount of integrity possible.
Unfortunately, accountants are human, and that means that they sometimes make poor decisions that can cost your company huge sums of money.
With access to the company’s financial records and assets, accountants are in a unique position to create fraud and, often, get away with it.
Hiring multiple accountants that can review each other’s bookkeeping work is a great strategy to ensure that no intra-company fraud is committed in the accounting department.
In addition, regularly auditing the company’s finances internally can prevent fraud or mitigate the damage before it balloons.
Restrict Access to Financial Records
Restricting access to financial records, both to outsiders and to employees who do not require access to perform their jobs is a viable way to secure your company’s records and prevent manipulation.
The fewer avenues there are for infiltration, the more secure your data and financials will remain, reducing the fraud.
Again, eliminating all fraud may not be a possibility, but when you utilize these tools and practices, you can significantly cut back on your company’s risk exposure.
Anita is a freelance writer from Denver, CO. She studied at Colorado State University and now enjoys writing about health, business, and family. A mother of two wonderful children, she loves traveling with her family whenever she isn’t writing. You can find her on Twitter @anitaginsburg.
Category: Business
