You think you trust everyone on your team, and you’d like nothing more than to have that trust with everyone. Trust is one of the things that creates a positive workplace and helps to build company culture. Which in turn, helps an organization grow.

how to prevent fraud in my business

As a collection agency, we hear the struggles of businesses all the time. Lack of cash flow, customers not paying on time or paying at all. When it comes to losing money in that way, it is easily detected. Just match up your invoice with your receivables and you should be able to decide if a customer has paid you.

But what about other ways your business is losing money? Could your business be the victim of fraud? Are your “trusted” employees really that trustworthy? While that trust is a great thing to have, regardless, you still need to watch out for fraud. It happens more often than you think.

Here are a few ways to safeguard your business against internal fraud:


Employees need to take vacations. Especially in an office setting. If you have an employee that could have access to anything financial, and they have not taken a vacation in years, that should be a cause for concern. In some cases, an employee that is committing fraud will not take a vacation because they are covering up their activities. If you work in the banking industry then you know, vacations are pretty much mandatory. Even if it is a hardship for you, you should require all your employees to take vacation time.

Audit your payroll

If you are running a larger operation, you may have payroll numbers called in by various departments. If someone in that department is committing fraud, you may be issuing more paychecks than you have employees. Make sure you are auditing your payroll on a regular basis. Check with your CPA, bookkeeper or your payroll company for guidance on how to that and how often.


We know if you’re working in certain industries, you may be working day and night during your busy season. We are a collection agency for lawncare companies among other industries, and we know that in that industry, when the sun is out, they are working hard. But you have to take time out to run your numbers. When certain people know you are busy and not paying attention, that’s when fraud can start. Take the time at least once a month with a trusted advisor and go through your numbers. If anything sticks out or looks odd, make sure you look into it.


You need to restrict access to certain items in your business. The first and most obvious is the checkbook. Not only should a select few have access to the checkbook but it should be locked up. You would be surprised at how many businesses we find where the checkbook for the company is just sitting there is a side draw. Next are any credit or debt cards for the company. Only allow certain people who need this have access to it. Put a system in place for when they do use it, to accurately report what was purchased and require receipts and other documentation to be turned in after each purchase. The other item is any signature stamp for checks. While many companies have made it a practice of not using signature stamps, if you have one, make sure it is always locked up.

Audit vendors

Another type of fraud to look out for is vendor kickbacks. Depending on the way a vendor is paid, someone on your staff could be benefiting by getting a piece of the action. Check in with your team and require any paperwork on that vendor that might be issued. Compare that with official invoice from the vendor. If you are looking for guidance, again, consult with your CPA or a forensic accounting firm.

Take action

While it might be harsh, taking legal action when you do uncover fraud is something to consider. First, it’s your right to do so. If you suspect fraud and can prove it, you should what you can to make your business whole for any losses. Two, it sets the expectations for the rest of your company that any fraudulent activity will not be tolerated. And that you will prosecute anyone that is thought to have committed fraud against the organization.

Create systems

The best advice we can think of is to sit down with your CPA and come up with a plan to prevent fraud in your organization. If your CPA does not have the answers, find a CPA firm that specializes in forensic accounting. They can analyze your company and internal systems and set a course of action for you to take.

Published On: June 13th, 2019Categories: Advice for Businesses

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