Business fraud is simply the intent or the act of misrepresentation to cause a gain or loss.

With limited resources and turbulent economic conditions, small-to-medium enterprises (SMEs) typically prioritise innovation, growth and survival over due diligence, internet controls and risk mitigation. These can often seem expensive, burdensome and bureaucratic business practices. However, this approach leaves SMEs particularly vulnerable to fraud with many owners and managers unaware of the fraud risks their businesses face.

It’s important to recognise that a fraud can come from anywhere, including staff members, customers, suppliers and unconnected third parties. Fraud can also seem inherently complicated and difficult to understand, as criminals use a variety of tools and techniques.

We can’t provide a single solution to prevent all business fraud. However, the information below should help you identify the most common types and take action to protect yourself, your staff and your business.

10 tips to prevent business fraud

Remember these 10 simple tips to reduce the risk of business fraud and keep your business and staff safe.

1 - Be sceptical

If it sounds too good to be true, it probably is. Always approach deals, opportunities, documents, transactions and information with an inquiring and questioning mind.

2 - Know your business inside out

Having a thorough understanding of your business will ensure that you know:

  • how it operates

  • the staff you employ

  • the products and services it provides

  • your target market and your business

  • your legal and regulatory obligations

This will help you detect immediately when something is not right.

3 - Know your customers and suppliers

Understanding who you do business with will help identify occasions where a seemingly ordinary business request or transaction looks out of the ordinary for that customer or supplier and may potentially be fraudulent. Conduct due diligence using a risk-based approach, such as verifying the legitimacy of customer or supplier details you have stored on file as well as online searches.

4 - Identify areas where your business is vulnerable to fraud

Take some time to imagine how a fraudster might target your business, both internally and externally, and consider testing the systems you have in place to reduce your risk. Ensure you and your staff are familiar with those systems and review them on a regular basis.

5 - Develop a strategy and talk about fraud

Consider a prevention strategy detailing controls and procedures to prevent and detect fraud that is adequate and appropriate for your business.

Staff look to owners and managers for guidance as to what behaviour is acceptable. Talk about fraud with your staff, suppliers and other contacts. Your staff need to understand the risks and the impact of any losses on the business and to themselves.

6 - Take extra care of all things cyber

With increasing threats from cybercrime, make sure your business technology is adequately protected against attacks. Make sure you back-up your systems in case they go wrong.

7 - Understand your finances

Understand how money leaves your business, including methods of payment, who has authority to make those payments and who checks payments are legitimate. Always check your bank statements.

8 - Secure and protect your property

This includes laptops, computers, smartphones and intellectual property. Consider factoring in business insurance to cover these items if they are compromised or stolen. Use and maintain inventories.

9 - Develop an action plan

Consider where you might need professional or legal advice. While prevention is better than cure, it’s important for you and your business to be prepared for the worst. Having an action plan in place will help limit your losses to fraud and help to ensure your business doesn’t suffer damaging losses.

10 - Always report fraud and get help

Action Fraud is the UK’s national fraud reporting centre. Report fraud here if you have been scammed or defrauded. Action Fraud provides a central point of contact for information about fraud and financially motivated internet crime.

You can also report fraud to the police in your area if the suspect is known to you or still in the vicinity. Call 101 to speak to one of our operators.


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