If you own a small business in Florida, finding trustworthy employees is crucial. When businesses are small, it’s difficult to establish internal control systems that can prevent insider theft and fraud. Because you won’t be able to monitor everything, you’ll have to carefully vet workers before hiring them.
Fraud affects small businesses the most
In the U.S., around 5% of annual business revenue is lost to employee fraud each year. If we only looked at small businesses, however, the percentage of losses would probably be higher. That’s because businesses with 150 or fewer employees are the most vulnerable when it comes to internal fraud. The most common types of fraud that affect small businesses are:
- Check tampering
- Expense padding
- Payroll schemes
- Billing schemes
Warning signs of future fraud
Just because someone is untrustworthy in one way, doesn’t mean that they will also commit fraud within your company. However, untrustworthiness is a good indication and a strong “red flag” of someone that may commit acts of fraud in the future.
Other possible warning signs of fraud are people that live beyond their means while they are experiencing financial difficulties. If a current employee won’t share certain job duties for no apparent reason, this may be a red flag. Employees that display unscrupulous behavior or greedy attitudes should also be monitored more closely.
Investigating suspected fraud
Internal fraud can wreak havoc on a company before it is discovered. If you suspect that someone is stealing from within your business, you may want to set up a hidden camera or hire a forensic accountant to get to the bottom of it.