Improving accounting processes and avoiding fraud involves internal controls that protect business assets and minimize risks.
These internal controls enable you to achieve efficiency and adhere to policies that improve your business performance. Internal controls can be a detective or preventive measure.
For example, having efficient accounting processes and proxies are preventive measures that ensure you transmit sensitive information safely in cyberspace.
According to statistics, global cybercrime is expected to grow by 15% every year for the next five years. The cost of cybercrime will also increase from $3 trillion to $10.5 trillion by 2025.
That means businesses need to do what it takes to protect themselves against fraud. Internal controls enable business owners to mitigate risks as they work towards archiving their business objectives.
Here are ways to improve your business’s accounting processes and avoid fraud.
Automate Accounting Processes
Introducing automated tools and workflows to your accounting processes will increase efficiency and reduce fraud. Implementing systems that have in-built vendors and leave a trail of payment records makes oversight easy.
Such systems make it possible to see adjustments to vendors or payments that employees make. This makes the accounting network safe and reduces the possibility of anyone sending fake bills to stakeholders.
It also reduces the chances of expense-reimbursement fraud, which usually takes businesses upto two years before detection.
Review Bank Statement Regularly
Financial statements are one of the most common forms of accounting fraud. The fraud causes a median loss of about $1 000 000. That’s why it’s essential to regularly review bank statements and check to see if there are any unauthorized credit or debit card transactions.
It also helps in detecting duplicate payments. Verifying correct deposits in your account can help identify irregularities.
Before you start reviewing your bank statement manually, make sure the statement is properly sealed and not open. Confirm and make sure the right person has properly authorized and signed the statement.
Scanning before opening a manual bank statement helps you to notice any red flags. It’s good to review your bank statement weekly or monthly, depending on the number of transactions.
Secure Information Files Using Proxies
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Businesses need to optimize and secure accounting processes online. Investing in Rayobyte proxy makes transferring data online safer. Proxies encrypt data so hackers cannot understand encrypted information even if they access it.
The proxy providers are committed to offering reliability and a wide range of ethical services. You will have the number of IP addresses you need to secure your business and take it to the next level.
Manage Acess to Finance Systems
Managing access to accounting systems reduces the likelihood of fraud. Maintain the administrative control of your finance system and determine who can access particular information.
Some of the sensitive components of your finance system should have access restrictions. This means only specific people with specific duties and responsibilities can access such components. Managing systems help to detect and solve fraud cases accurately and faster.
Segregate Duties
Lack of segregation in finance work can lead to fraud. If one person performs all accounting tasks, it means there is no oversight. For example, allowing one person to receive, process, pay invoices and manage business cash flow makes accounting fraud possible.
Having two or more people with different financial responsibilities reduces such risks. Segregation of duties helps you identify dishonest employees and security loopholes.
Secure Credit Card Processes
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Fraud involving credit cards is common in the online environment. Statistics show that global losses from credit card fraud will reach $43 billion in the next five years. That is why businesses should ensure they use secure systems for payment. Make sure you share credit card information with the right people.
Small business owners should also ensure they separate their personal accounts and business accounting. If an account is hacked, it will only affect one account, not both.
Insurance for your Businesses
Insurance protects against losses. The impact of fraud can cause huge financial losses.
Purchasing insurance can cushion you against such losses. Businesses may have the best measures and controls, but fraud can still occur.
An insurance cover provides extra precaution. It does not prevent an attack, but it helps you reduce the impact of the attack.
Having a good policy will help you get back to your business. Depending on the policy you choose, you can be fully or partially compensated.
Conduct Employee Background Screening.
Performing background checks before hiring new employees helps to eliminate fraud in your business. It ensures you avoid negligent hiring that is risky. Such risks include hiring a person who is a threat to your business.
Confirm their academic achievements and contact referees. This helps to verify the information they provide.
Check if there are any criminal activities before you hire a new employee. Background checks also ensure you hire the most qualified candidate who will contribute to the business’s success.
Train your Employees
Training your employees empowers them to know when there is a likelihood of fraud. Regular training programs help employees learn more about fraud and any new tactics hackers might use to commit fraud.
Employees will also know how to identify suspicious behavior and what they should do if fraud happens.
Provide a secure reporting channel. For example, an anonymous reporting channel will protect whistle-blowers and encourage more employees to report fraud cases.
Training employees creates behavior that reduces fraud and promotes business growth. It enables you to build professional knowledge and skills for developing and implementing anti-fraud programs.
Key Takeaway
Keeping your business safe enables processes to run smoothly. It helps you put the best business control and strategies in place to prevent and detect attacks.
Fraud preventive measures will give you peace of mind and save your time and money. It also improves accountability among co-workers.
Employees and customers will have strong confidence in your business. This is because fraud prevention and detection stabilize your business functions, allowing you to archive your business objectives. Following the correct fraud detection procedures and using the right technology improves how you detect and prevent fraud.
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