Business fraud prevention – Why it matters and how to take action

According to the Office for National Statistics (ONS), it is estimated that 4.5 million fraud offences were committed in the UK for the year ending March 2022, an increase of 25 per cent compared to the year ending March 2020.

With cases of fraud on the rise, businesses must have practices in place to prevent being hit with damaging attacks that could cause untold financial harm.

This is especially true for small business enterprises (SMEs) who may not have the resources to recover from a particularly malicious scam.

Types of business fraud

There are many ways that fraudsters can hoodwink businesses, and as technology becomes more advanced, so do the methods of scams.

Businesses need to be constantly on their toes to stay ahead of the curve and keep the scammers at bay.

Below are the most common types of fraudulent activities that businesses can expect to see regularly:

• Invoice scams – Emails received from a ‘supplier’ with an invoice request. The email may look to have come from a genuine supplier, but the bank details will of course be different. Similar emails are sent to request bank details to be changed to the fraudulent account for future payments.
• Fraudulent orders – Simply put, a customer placing an order for goods or services who has no intention of paying. More of a risk to SMEs who may not have established a loyal client base.
• Procurement fraud – The changing of a supplier who will charge extra for their services but will be of a lower quality than your previous supplier.
• Management impersonation – Often, scammers will impersonate a manager or CEO of a business and ask their employees to make payments to them.
• IT team impersonation – Again, scammers will send emails with the aim of duping employees, this time into thinking they are from the IT team. They will then ask for company-sensitive information such as passwords. Handing out such data could be disastrous.

Methods to stop fraud

With the seemingly never-ending number of scams around in today’s world, it can appear extremely daunting for business owners to ensure they are not stung.

However, there are steps you can take to prevent fraud and keep your business away from the scammers.

Know your suppliers and customers

With fake invoices and requests coming in from various suppliers, it’s important to have a vast knowledge of everybody that your business deals with. An invoice with incorrect bank details will be so much easier to spot when you have this knowledge.

Education

Employees will look to their managers for guidance on fraud, so if they are educated on all aspects of the business, it will make it easier for them to detect any unusual activity.

IT Security

Many scams and cyber attacks can be prevented immediately if there are sufficient IT security measures in place. Investing in security software is a must to ensure your assets are protected.

Although you can put into place many measures for the prevention of business fraud, nothing is infallible. It may, therefore, be wise to consider an action plan with a legal team to make necessary arrangements for any fraudulent activity that could affect your business in the future.

Worried about fraud affecting your business? Contact us today for expert advice.