External Fraud Prevention

external fraudThere are many different facets to the fraud issue for businesses.  Check out this article from Legal Shield of 8 Ways To Protect Your Business From Fraud.

It is important to note that the eight concerns they list are mostly related to external fraud.  The 8 protections that Legal Shield lists are:

  1. Loan Scams – The basic rule of thumb is that if it sounds too good to be true, it probably is.  Ask lots of questions before sending money to anyone especially if they claim it is a fee to set up a loan.
  2. Directory Listings – If anyone calls and offers to list your business anywhere make sure your first question is regarding cost.  Do not agree to anything over the phone or by email unless they clearly state there is no charge.
  3. Fake Government Filings – Be very careful with any calls or mail you receive from the government that seems questionable.  When in doubt check in with your bookkeeper, accountant, or lawyer.  Do not just send money or sensitive information without ensuring the authenticity of the requesting party.
  4. Phony Invoices – If you ever receive an invoice you were not expecting do not simply pay it, it could be a scam.  Make sure that your accounts payable person knows what invoices they should expect and asks you if they see a new vendor.
  5. URL Scams – There are people who will send an email stating your domain name registry is about to expire.  If this is from a business that you have not worked with before, make sure to look into it.  Your domain name renewal will always be with the same company you register through.  If you are not sure, contact your web developer.
  6. Charity Fraud – These scams are most often in the form of law enforcement or firefighter charities.  Be cautious of any charity that contacts you and make sure that you research fully before agreeing to donate money.
  7. False Check Scam – If you receive a check unexpectedly make sure to read everything that came with it before cashing it.  Some of these checks may have fine print that will cost your business lots of money.
  8. Rogue Employees – This is internal fraud, a much larger issue.  Make sure to stay tuned to the Polymath blog for a full, detailed article on how this happens and how you can prevent it.

The overarching theme here is be aware of your business and its expenses to avoid external fraud.  Make sure that any organization that cold calls or cold contacts you is legitimate before agreeing to do business with them.  Never just pay a bill if you are not sure where it is coming from.  Communicate clearly with your employees, and make sure that no one is agreeing to something on behalf of your business without complete information.

Internal fraud is a huge concern in the bookkeeping world.  Make sure to check out the Polymath blog for a full article examining internal fraud and ways to prevent it.

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