Fraud is a growing threat to small businesses, with scammers using digital tools to evolve and innovate new ways to target potential victims. Small businesses that operate with limited resources and tighter margins may be particularly vulnerable to risk. Even one incident of fraud could be financially devastating. Fortunately, there are steps you can take to reduce your risk. Here are five strategies to help prevent fraud in your business:

1. Educate and Train Your Team

   Your employees need to be the first line of defense against fraud. Regular training on how to recognize phishing emails, phone calls, suspicious invoices and social engineering tactics is essential. Fraud tactics keep changing, meaning continuing education and awareness are a must. Encourage a culture of skepticism and verification. Teach staff to double-check unusual or suspicious requests, especially when they involve financial transactions involving sensitive data.

2. Implement Strong Internal Controls

   Not every threat is from the outside. To mitigate mistakes or internal fraud, segregate duties so no single employee controls all aspects of a financial transaction. Require dual approvals to get a second set of eyes on payments and changes to vendor information. Audit your financial records regularly.

3. Use Technology and Tools

   Adopt multi-factor authentication (MFA) for all systems and logins. Invest in cybersecurity software that includes malware detection and endpoint protection. Use real-time dashboards, monitor financial accounts, and check them daily.

4. Verify Vendors and Invoices

   Business email compromise scams often involve fake invoices or altered payment instructions. Always verbally verify new or changed payment details, even if it is with a known contact. Do not use the contact information included in the email or text message. Check invoices against purchase orders and confirm delivery information. Ensure you do due diligence when dealing with a new vendor before onboarding them.

5. Secure Your Digital and Physical Assets

   Cybersecurity is only half the battle. Many incidents of fraud involve the compromise of sensitive documents or physical access to devices. Be sure to lock up sensitive paperwork. Restrict access to computers, checks, credit or debit cards and terminals signed into financial systems.

If you feel you have been a victim of fraud, notify your bank immediately.

Fraud tactics change and evolve daily. Stay updated through alerts and articles from trusted sources such as the Consumer Financial Protection Bureau, The Federal Bureau of Investigation and, of course, Cadence Bank’s Fraud and Security Center.

Sources:
https://www.consumerfinance.gov/consumer-tools/fraud
https://www.fbi.gov/how-we-can-help-you/scams-and-safety
https://finance.yahoo.com/news/financial-fraud-detection-prevention-market-140800017.html
https://www.forbes.com/councils/forbesfinancecouncil/2024/04/03/4-strategies-for-building-a-fraud-resistant-small-business
https://www.forbes.com/councils/forbesbusinesscouncil/2024/10/01/fight-fraud-and-win-why-the-tide-is-shifting-in-small-businesses-favor

This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.