It’s tough enough to grow a business without people ripping you off. Here are four simple ways to protect your business from fraud.
Small business owners know that it takes lot of hard work to build a successful business. You most likely read this and other advice articles looking for ideas and inspiration to help push your business to even greater success. That’s awesome.
But while you fine tune your sales pitches, marketing strategies and countless other aspects of your business, don’t forget to protect what you’ve already built. Criminals, who make their living by committing small business fraud, keep coming up with new, insidious ways to take your money.
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As Dr. Martin Bressler, a marketing and management professor at Southeastern Oklahoma State University, noted in an article at Small Business Computing that a single instance of loss due to fraud typically costs the business owner $190,000. We’re turning an old adage on its ear, because when it comes to small business fraud, your best offense is a good defense. Experts offer these four tips that you can easily incorporate into your business to foil scammers and crooks.
1. Compare checks to invoices: Keep a sharp eye on any incoming cashier’s or business checks you process. The checks may look real, and they might even make it past phone or online confirmation. The problem, however, is that they may not correspond with your customer’s order. That sketchy check is usually followed up by a distraught or embarrassed “customer” asking for a refund. It can take weeks for a bank to deal with a fraudulent check, which gives the perpetrator plenty of time to make a clean getaway with your money.
2. Institute a wire transfer policy: If you allow your customers to pay with wire transfers, you run the risk of having your business account cleaned out by an informed criminal. Fortunately, there’s an easy fix. Ask your bank to set up a free checking account and use it only for accepting wire transfers. Now you can provide customers with the account number and routing information knowing that you’ve minimized the risk of unauthorized ACH transactions wiping out your business.
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3. Apply for funding only from legitimate sources: You can find anything online, including websites that purport to fund entrepreneurs, start-ups and small businesses. In reality, it’s just another variation on a phishing scam, designed to get your personal references and account information. Armed with that info, scammers can gain access to your bank accounts and even set up fraudulent credit card processing accounts in your company’s name. Be smart: only apply for funding through proven, legitimate lenders.
4. Don’t pay bills before confirming you incurred them: Another popular ploy used by scammers is to trick company employees into authorizing purchases. What follows, typically, is an escalating onslaught of abusive calls and threats in an attempt to extract payment. The Federal Trade Commission says that small print on a survey or a directory listing request does not an order make, and that contracts made without authorized consent can’t be enforced.
Lauren Simonds is the managing editor of Small Business Computing. Follow Lauren on Twitter.
Adapted from How to Fight Small Business Fraud, by Joe Taylor at Small Business Computing. Follow Small Business Computing on Twitter.