Each year, businesses in the U.S. and around the world suffer staggering losses from fraud. The Association of Certified Fraud Examiners reports that certified fraud examiners reported a median loss of 5 percent of the businesses’ annual revenues for businesses that were victims.
From this percentage, the ACFE projected that the total losses from fraud that were suffered by businesses around the globe in 2017 were valued at $4 trillion. Fraud can cripple small businesses, causing some to fold. It is crucial for your business to take steps to identify your risk of fraud and to prevent it. You might start by reading the information contained in the fraud ebook from Bento for Business.
How many small businesses are affected by fraud each year?
In its report to the nations in 2017, the ACFE reported that small businesses suffered median fraud losses of $200,000. In its 2014 report, the ACFE reported that businesses overall suffered median losses of $145,000. The ACFE reports that the total losses from the cases that fraud examiners investigated in 2017 were more than $7.1 billion. However, as stated in our fraud e-book, the ACFE notes that this amount was just a fraction of all of the losses that happened.
What are the most common causes of fraud?
According to our fraud ebook the most common causes of fraud include having limited or no internal controls. Many small businesses do not have strong internal controls or expense management practices, leaving them susceptible to fraud. They may also trust longstanding employees and never check their work. People who are in positions of authority and who are trusted by their companies are more likely to commit fraud, however. To find your risk of fraud, you might want to try the free fraud calculator at Bento for Business or read our fraud book.
What are the types of fraud?
Fraud schemes may take many forms at businesses. Common types of fraud that can happen include check fraud and credit card fraud, more can be found in our fraud ebook. Check fraud may involve people who have signatory authority forging checks or writing them to themselves. They may then make false entries in the books so that it appears the payments were for legitimate purposes.
Fraudsters may also make fraudulent charges on the business’s credit cards. In some cases, people may apply for business credit cards themselves and then run up charges without the business’s knowledge. Other common types of expense fraud might include fraudulent reimbursement requests, thefts of petty cash or electronic transfers of funds from the company’s checking accounts. The free fraud book that is available from Bento for Business goes into more detail about the various types of fraud that businesses might encounter both internally and externally.
How can fraud be prevented?
To prevent fraud, your business may want to check your risk of fraud by answering a few questions on our free fraud calculator. The calculator will calculate your risk and give you some suggestions about steps that you might take to minimize it. You might also want to download our free fraud e-book.
The fraud e-book offers some in-depth information that can help you to implement strong fraud prevention and expense management measures that can help to deter fraud at your business. You may also want to install an expense app from Bento for Business on your mobile device. It can keep you up-to-date on how your money is being spent on your debit cards so that you can act quickly if you see misuse. You may also want to read a fraud case study so that you can see how fraud may be perpetrated against businesses.
Bento for Business offers robust fraud prevention solutions for small businesses. Business owners may derive substantial benefits by choosing to limit their employees’ access to cash and giving them debit cards that have strict limits on their spending abilities for needed purchases. Learn more by calling 866.220.8455 or start a free 60 day trial