Tips to Protect Your Business From Fraud

Fraud is more prevalent than ever, according to Hillary Combs-Orgeman, Bank Relationship Manager at Associated Bank. With 33% of all business failures or bankruptcies due to fraud, protecting your business on multiple fronts is more than proactive—it’s necessary.

Certain fraud risks are more likely in small businesses than larger organizations, according to the Association of Certified Fraud Examiners. These include:

• Billing fraud: 2xs higher
• Payroll fraud: 2xs higher
• Check and payment tampering: 4xs higher

Follow these steps to help safeguard your business.

Protect your personal identity

Protecting your business from fraud, starts with protecting yourself from fraud. “If you end up needing a business loan and you’ve been a victim of personal identity theft, remember that your credit score is what’s used to determine your business lendability,” says Combs-Orgeman.

These are a few other measures you can take to protect your personal identity:

• Use free credit monitoring applications.
• Consider freezing your credit if you know you won’t be applying for a credit card or a loan soon.
• Store your account login information in a secure place.
• Store your personal and business checkbooks securely.

Vet new hires

It’s critical to hire honest employees who will stay in control of your bank accounts. Incorporating background checks into your hiring process is always a good business practice to help ensure you’re hiring the right candidate to manage money.

Use an outside accounting firm

A third-party firm can significantly reduce the risk of errors, and the firm can typically detect fraud more quickly. This is critical because the average time it takes for businesses to detect fraud is about 18 months. Early detection is key to reducing your businesses’ possible losses from fraud.

Educate your employees

Make sure your employees they have the digital and financial literacy needed to make safe and informed decisions.

Associated Bank’s free Bank at Work program is designed to empower employees and owners. “It gives your employees access to financial literacy, including how to safeguard their accounts, how to protect themselves from fraud, how to protect themselves from identity theft and a plethora of other employee-engaging benefits,” says Combs-Orgeman.

Put dual control on banking activities

Fraud is less likely to occur when there’s more than one person signing off on business transactions. With dual control, two people are needed to authorize every banking activity, from cutting checks to receiving payments.

When used in combination with multifactor authentication, you’ll have extra layers of security to protect your business from threats.

Prevent check fraud

“If your business pays with paper checks, definitely take advantage of one of our check fraud preventative solutions such as Positive Pay,” says Combes-Orgeman.

Positive Pay ensures that dollar amounts on checks aren’t being manipulated or forged and that the exact dollar amount is being paid as intended. Check out additional fraud preventative solutions to help prevent check fraud, electronic/ACH fraud and protect the assets that are in accounts with no activity on them.

Protect your computers and login information

Although outside hacking and large data breaches are much rarer than everyday check fraud when it comes to small businesses, it’s still crucial to safeguard your accounts and employee information with company-wide firewalls and complex passwords.

For smaller businesses, it’s also smart to dedicate one computer to banking only. When there’s a limited web history, personal email or social media sign-ins, your network will be far less vulnerable to phishing scams with such a limited entry point.

Create a sweep account

To protect your funds that exceed the $250,000 FDIC limit, consider spreading them out in multiple locations with a sweep account.

“What we do is we sweep the money into several different accounts at different banks, under the umbrella of Associated Bank to get that FDIC on all your business funds,” Combs-Orgeman explains.

Beware of fraudulent emails

According to the FBI, business email compromise is one of the most financially damaging online crimes. Ask yourself the following questions before responding to a suspicious email:

• Do I know this person? You do not recognize the company name or the person sending the email. Searching your email does not bring up any previous emails from either. Check the return address and note any missing letters and errors
• What are they asking me to do? The sender is asking you to click on a link but does not provide any information about why you need to.
• Why are they asking me to look at the attachment or linked information? The email is attempting to appear normal, but it is not linking to any expected website (don’t click the link; instead, hover over it to see the URL).

Learn more about what security products are best for your business.