After my wallet was stolen last year I decided to freeze my credit. The fraud consultant revealing an interesting statistic to me: We can assume everyone is a victim of fraud in some capacity and that includes the people committing the fraud!
Business owners are victims of fraud too, which can mean thousands of dollars in losses, and in some cases bankruptcy. To fully protect your business finances, you need to have a solid security plan protecting everything from your computer software, to maintaining an attentive vetting process for your businesses clients, vendors and staff. Having a system that tries to prevent fraud helps reduce the suffering of big losses in assets and productivity.
The best way to reduce the chances of identity theft is to protect valuable documents. Make shredding company mail and documents a weekly ritual. Keep up with your company’s credit history at least once a year via the three bureaus: Equifax, Experian and Trans Union. Consider photocopying credit cards, your drivers license and other private documents that are critical to your business for the just in case and worst case scenario.
Employ several means of security, says a fraud agent. Update virus and passwords every 2 months to keep hackers at bay. (And pick complicated passwords! I am a fan of picking a word and purposely spelling it wrong.) Consider a personal firewall and disabling your company computers from file sharing.
Bottom line: there are creative snoops inside and outside your business and it’s your job to keep your information and financial details private. Losing 5% of gross sales to fraud isn’t exactly chump change – especially in these financial times.
“I have heard of stores loosing $10 to $20K per year based on their overall sales,” says Wendimere Reilly, the owner of Herb Shoppe Cagan Crossings in Florida. “As a small business owner controlling fraud is a critical component in optimizing your profit margin. Reducing shrinkage can add several percentage points to your bottom line.”
As a retails store owner Reilly says through her previous experience working in other stores before owning her own she found there to be three categories of fraud in her industry: customer returns, shoplifting, and employee theft.
“Some might be surprised that I list customers returns as my top priority for reducing fraud,” says Reilly. “I want my customers to be completely satisfied with their purchases but not to the point that I encourage bad shopping behaviors, especially when dealing with health supplements. It only take a few bad customers to effect margins, and word spreads quick.”
Reilly is focused on the more outright fraud like shoplifting. She’s a fan of training her employees to greet and make eye contact with every single person that enters the store. “Shoplifters will quickly size up a store and take their "business" elsewhere,” says Reilly. Think like a thief, she advises. Figure out ways you could steal from your own business and then add the appropriate safeguards. “I make sure handing customers receipts is shop policy and that [I] have a strong inventory management system in place,” says Reilly.
Once you have a handle on a prevention system then you can keep the fraud to a minimum. The time management involved in this upkeep however is another article!
