Five effective ways to keep internal fraud at bay.

Internal fraud is becoming a huge challenge for small and medium-sized businesses. This is because smaller businesses are usually understaffed, and employees are charged with more than one function in the organization. There is also a greater chance of administrators and employees developing close relationships, which may get in the way of effective oversight and supervision. If you run a small business and are worried about the prospect of a malicious employee taking you to the cleaners one day, this article is for you. Read on for five effective ways to keep internal fraud at bay.

1. Handle bank documents personally

Even if you have an in-house accounting team, it is best to handle your business’s bank statements personally if you want to close one of the most used channels of fraud. On top of that, request for a record of all canceled checks from your bank and review signatures, payee details, and endorsements on each check. Signs of fraud include but are not limited to unknown payees, forged signatures, check amounts larger than your typical petty cash maximums, improper check numbers, and inconsistency in pay names in software and on the check.

2. Hire a forensic accountant

Forensic accountants are traditionally hired to assess cases that have already occurred. Still, you can use their services in auditing your books just to ensure nothing is happening behind your back. When looking for a forensic accountant, consider putting qualifications, experience, and track record at the top of your filter-down strategy. Also, ensure they have a flexible service package inventory. Established companies such as the Knowles Group have stood the test of time by providing the perfect balance of experience and credibility. Such companies should be prioritized when looking for someone to build a long-term relationship with.

3. Develop a strict recruitment strategy

Reckless recruitment is a common culprit behind business failure in the 21st century. A good hiring approach should not just take into account a candidate’s academic qualification and experience; it should also allow for background checks to ensure you don’t hire someone with a history of fraud. Ask to know why the candidate left their previous job and what they think of dishonesty and fraud. If you detect any hint of duplicity, conduct further research for good measure.

4. Offer mandatory training on fraud prevention

While it is imprudent to trust your entire workforce, there is a good chance most of your employees are honest people with the company’s best interests at heart. You can enhance your finance’s protection by providing all your employees with training to detect and anonymously report suspicious activity from one of their colleagues. This will not only help you halt fraud in its tracks but also discourage employees from attempting fraud.


Business and employee fraud prevention are often easier said than done. However, by taking proper proactive measures, you can stay a step ahead of your internal enemies. Use the above tips to create a fraud-prevention strategy and protect the assets and reputation of a business you have worked so hard to build.

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