Fraud - don't risk it.

No matter what size your business is, you are at risk of fraudulent activity. In fact, small businesses with fewer than 100 employees, reported 28% of all instances of fraud – a higher rate than for medium and large businesses – and suffered greater losses in relation to their size. In fact, business reports losing around 5% of total revenue per-annum due to directly to fraud!

SMEs have specific vulnerabilities that can be easily exploited. Owners are working excessive hours trying to build their businesses, are pressured by the responsibilities of caring for livelihoods of employees and family and trying to keep their businesses afloat in tougher times. There is no option but to place trust in the skills and experience of others to take care of back-office administration so you can get on to what you do best – earning income for your business.

It's devastating when the people you trust are actually betraying you and your business from within. The cost of fraud and theft goes way beyond the monetary value – it is a wound that can take a long time to heal. You and your committed employees may feel betrayed – how did we miss that? There may be a loss of confidence in your staff, and their productivity then declines; because your once cohesive team is now suspicious of everyone and looking over their shoulder; or even looking for a job elsewhere.

So when you consider that small businesses are powered by passionate owners, like you, who invest so much of your time and energy into pursuing your dreams – it is time to look for a reliable solution. There is no doubting that you work hard, but your focus can be pulled in a thousand different directions at any point of the day. When you experience the success of growth, you also have to be prepared to face increased challenges, such as monitoring cash flow. But of course, this may not be what you do best, or where you need to invest your time – and that's where we can help.

Whilst it is imperative that you maintain a high degree of scrutiny over your own financial affairs, we have the expertise to be an integral part of your business and help you minimise your risk.

Here are five of the most common fraudulent practices and scams that can prey on business.

1. Payroll fraud.

Shockingly, payroll fraud is reported in about 27% of businesses, and twice as frequently in small businesses (fewer than 100 employees) than larger ones. The main ways include:

Pay themselves more than entitled in tiny increments first

Setting up and paying a non-existent person, or

Bumping up overtime records and leave balances.

Of course payroll complexities significantly increase as your company grows, especially if overtime is a factor. We can give you peace of mind with a fraud assessment to spot and close the gaps that make you vulnerable.

2. Cash theft.

Cash has a funny way of disappearing in a small business. Whether through Skimming (when an employee takes cash that hasn't been recorded on the books yet, or there are lots of little discrepancies that add up) or Pilfering (when an employee releases funds that haven't been authorized by the owner – an increase in petty cash usage can be a sign). Cash theft creates a negatively cumulative impact on the bottom line. Whether you are just setting up your business or looking to improve, our team can help streamline your cash monitoring process, both for an effective financial process and also to maintain essential supervision of cash within your business.

3. Online banking.

The increased popularity of online banking has also increased the likelihood that funds can be diverted to erroneous accounts, and cyber-crime has never been more sophisticated. There are a few procedures available that can beef up your defenses against faceless scammers.

Pacifica can diagnose your exposure before the consequences of fraudulent activity become a very real problem.

4. False invoicing.

False invoicing is an increasingly popular fraud method. It often strikes when an employee creates false suppliers or when they pay a legitimate supplier and divert the cash into an alternative account. Using data analysis, there are ways to check if this is a risk, or it's actually happening to you. Pacifica can review your invoicing processes and reporting to make sure that these fraud tactics are avoided.

5. Supplier Invoice scams.

This scam often involves perpetrators posing as legitimate suppliers. Scammers cultivate relationships with the people in your organisation that pay out money. It seems like innocent banter, but the scammer is profiling your team to find the weak link. Soon enough an email or phone call will come through advising of a change in bank details. Bogus documents are then sent to you that look very legitimate. Once you've updated a legitimate supplier's bank details, invoices that look the same as usual start arriving. You're paying them, and your real supplier is on your tail demanding payment! You've just lost a healthy sum to scammers, and as a bonus you still have to pay your supplier what's owed! That's a duplicate cash drain. Won't happen to us? We're too small to be of interest to scammers? Don't we have some firewalls or thing-a-me-jigs that catches this sort of thing? WRONG – Admitting you're at risk is the first step in defending against it.

In recent reports, small businesses that recorded fraud suffered a median loss of $150,000 . That kind of hit can break a business. So whilst it is important to develop a great team and grow your business, it is also vital that you maintain tight controls on your financial activities. When owners are too busy with what they do best to monitor business financials, the potential for fraud and detrimental loss rises. Don't fall into this trap. Our team will not only reduce your risks and identify processes that need tightening, they also provide you peace of mind – and as you know, in business, that's priceless.