Know who your business is dealing with

Know who your business is dealing with

Fraud is one of the biggest issues when it comes to small business and identity fraud is of particular concern for many UK citizens.

We are constantly warned that nefarious individuals are out to get their hands on our money and to a certain extent this may well be true – research shows that in 2012 the cost to the UK economy because of fraud was valued at £52 billion. Identity fraud alone accounts for half of that amount.

The effects of fraud can be extremely serious, particularly for a small business that has to watch every penny of their budget. The most worrying aspect is that fraud continues to grow at an alarming rate. In 2011 it leapt by an astonishing 9% and last year it increased by a further 5%.

Unfortunately it seems that the major growth industry in times of recession might well be fraudulent activity.

These figures alarmingly constitute the highest level of fraud recorded within a single year, numbering almost 250,000. Bear in mind that this is only just an estimate based on the fraud that is reported; if you factor in the amount of fraud that remains undetected or unreported the true extent of the problem is liable to be even worse.

In fact, statistics suggest that it takes a victim of fraud on average over 500 days to actually realise that they have been defrauded by someone. This is quite a depressing stat when you think about it, as it implies that either people are being extremely lax about their financial management or the fraudsters have gotten so advanced that they can pull off a virtual heist on your business without you even realising it!

Another problem that businesses face is that many people are – to put it politely – being very economical with the truth when they apply for work these days. Research shows that a huge number of businesses are subject to CV misrepresentation and they have very little recourse or way of accurately checking applicant CVs.

People lying on application forms is nothing new, but with such a limited job market currently available it seems more people than ever are doing it (or maybe they are just getting caught out more easily!).

This is just one more form of fraud that small businesses face and dealing with the repercussions of hiring and then firing someone who is unsuitable for a role can be a huge drain on your resources in terms of time and money.

Here are some good tips for avoiding fraud (look out for a Top 5 Tips post in the near future that will go into this topic in more detail):

  • Get some quality email software that will protect you from phishing emails.
  • Make sure that you conduct frequent Bank Reconciliation – this is essential in detecting fraudulent activity quickly.
  • Wherever possible, try not to offer your products or services on credit.

You should also go out of your way to learn more about the people you are doing business with. Because I feel so strongly about this issue, my company WinWeb has today added a great new feature to our CRM application that allows you to get information about your customers and suppliers directly from Companies House.

We hope you find this new feature useful.

comments powered by Disqus
WinWeb Business Cloud - Creating Financially Sustainable Businesses