According to the Experian recent report, the amount of financial fraud in small businesses has rapidly increased up to 33%. And it mostly relates to businesses dealing with finances on a daily basis, like accounting business.
At each stage of business development, accounting companies expect numerous pitfalls and challenges. When you only start a business, you may not have enough experience to properly dilute your finances, and evaluate inner processes, efforts, and their correlation to your revenue. When your business grows to medium, the number of daily tasks, employees, and customers are growing. Thus, your company deals with a huge amount of information and numbers that can easily be confused and stolen. The same problems happen when your accounting business grows into an enterprise, but they become much more scalable.
From our point of view, it is essential to find the best approach to manage and secure your finances to prevent and avoid financial fraud for your accounting business. Hence, we will provide several workable methods that will help your company never become a victim of business financial fraud.
Select your partners and employees properly
Along with hiring employees for providing financial services for your customers, commonly accounting businesses partner with various organizations and specialists that help them with different questions and concerns. These are lawyers, investment advisors, insurance companies, tax managers, and so on. Before signing contracts and providing new employees and partners with secure financial information about your customers and your firm, ensure that their intentions are sincere and transparent. There are lots of cases when the closest workers and partners betray and hide the financial fraud schemes from business owners or C-level officers.
As for employees, the recommendations from their previous places of work are a must as the financial sphere is very vital to your business’s success as well as your clients. As for new partners, you can ask for suggestions from your close friends in business or examine the reviews of other companies on website ratings these partners cooperate with too.
Integrate financial management software into your workflows
These days, innovations are introduced in literally all business niches, and accounting is included in that list as well. Implementing various software tools for the purpose of automating some processes and enabling the overall company productivity is gaining momentum. The selection of software solutions depends on your ongoing needs and the specifics of workflows that need to be managed. For accounting businesses, the best choice would be financial management software like Mint or other tools such as a tech stack used by accounting professionals within their toolbox.
Ensure the security of the credit card information of your clients
This recommendation will come in handy if your accounting firm provides the ability of digital payments for financial services for your clients. Basically, credit card data fraud is supposed to be the most popular in the financial area, no matter whether you are a client of a certain bank or owner of an accounting business.
So it is essential to protect your clients from this type of financial fraud. If your firm allows clients to pay for services on your website, mobile app, or other types of online transactions, select the highly secured payments gateways like PayPal, Payoneer, etc. If at this moment you cannot provide secure digital payments, then you should suggest your client pay in cash or send the receipts to help them avoid financial fraud with their private information.
Hold a regular audit of your finances
Money likes to be counted. Along with being constantly engaged in your business process, particularly related to finances and money, you need to hold a finance audit by hiring a credible independent expert externally. It helps to reveal the proper dilution of your budget, the correctness of monthly financial reports, the correspondence of your financial documents to the official financial standards and regulations, check the tax payments and their correctness, etc. So even if your accounting business is now in a fraud scheme, the audit expert will reveal it asap and provide the solutions that can fix this problem.
Your employees and partners have to be aware of the consequences if they will ever try to put your business into a financial fraud scheme. They need to be familiar with each point of this policy before signing the contract with your firm. It doesn’t mean that your employees have to be under pressure during their working time, but they need to clearly understand the punishments they can get if their intention will not be 100% transparent and beneficial for your accounting business. All business information must be held under NDA, and this type of contract is advisable to sign with each employee and partner you share sensitive financial information.
To sum up
Frankly speaking, the accounting industry is under constant threat of being involved in financial fraud, more likely than in other business spheres. You will never guess who will be that person who will commit fraud related to your accounting firm. The tips we discussed in this post will surely help you avoid fraud situations and learn how to detect them at an early stage. However, do not be constantly afraid of getting into financial fraud.
Your pivotal task is to be aware of various types of these frauds and know precise solutions on how to deal with them in the short term to avoid harm to your accounting business. This knowledge can be provided by your financial advisors or partners, but before, make sure these advisors are reliable.