The digital age has revolutionized business finance. It is now more efficient and convenient. The majority of industries do not have to deal with hundreds of paper checks that come in and go out of the office on a regular basis. A linked bank account can be used to send and receive payment with the click on a button.
With all the convenience, comes a financial risk. Criminals can also access your account via a computer. Your business can be protected by ensuring your risk management processes are current. These three tips will help you keep track of your finances to prevent fraud and mistakes.
1. Subscribe to alerts
If your company is fairly small, it’s not too difficult to keep an eye on your finances. You may only have one, two or three bank accounts as well as a company credit card. Your bank or credit card provider should notify you if there are fraudulent charges on your credit card or unauthorised bank transactions. A daily routine check by you or an employee is likely to help you spot errors and fraud.
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After your company has grown, there is a lot to keep track. Even a relatively smaller holding company could have eight accounts and twenty credit cards distributed among employees and owners. A single owner or finance employee tracking these accounts can allow transactions to go unnoticed. If a scammer is able to rack up thousands of dollars worth of fraudulent charges in a matter of hours, then time is of the essence.
It is recommended that at least two people sign up for alerts. Many banks and payment apps offer this service. You can customize notifications based on dollar amount and geographic location. Alternatively, sign up to comprehensive monitoring apps which connect with multiple financial institutions. These solutions allow you to check your accounts from a single location without having to sign in to ten different websites and accounts.
2. Pay attention to payee access
You’d think that bank accounts would be one-way. I mean, wouldn’t it be crazy if businesses and other payees could just take money out of your account without asking? Crazy or not, it’s a genuine concern, especially when it comes to payments to and from federal and state governments.
For example, let’s say your business used to operate in California but has moved all services and locations to Missouri. Even if you’re no longer in California, they may decide that you still owe taxes. The state also has access to your account if you paid taxes in the past using it. If you don’t willingly pay what the state determines you owe, it can freeze your account or just take the funds. Even if the money was taken in error, it may take several months or even years to recover.
That’s why it’s so important to make sure you know which accounts are linked to government entities. If you’re a dentist who contracts with and receives payments from the Department of Veterans Affairs, for example, those funds might travel on a two-way street. That’s why it’s a good idea to have a separate bank account just for government transactions. You can maintain low balances and avoid having one account frozen cripple your business.
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3. Avoid employee complacency
Phishing is still one of the most popular ways for criminals who want to get access to your personal finances. Over 90% of cyberattacks are started by phishing. Emails and phone calls are used to trick users into disclosing personal information or clicking on harmful links. Phishing scams can be sophisticated or absurd.
One of my business associates who ran a small CPA practice almost fell victim to an elaborate phishing scheme. Someone claiming to have a contract for annual maintenance of printers and ink refills contacted a new office manager. The vendor informed the new office manager that an annual ink refill cost $650. They also provided information about where to send their check. The office manager was ready to pay up before she checked previous years’ financials and found no record of the vendor. The company actually bought its refills for $200 annually from a large-scale retailer.
To reduce your business’ vulnerability to criminal financial attacks, employee vigilance needs to be emphasized and continuous. Briefly touching on phishing and other fraud schemes during an employee’s first week on the job isn’t enough. Employees can become complacent over time about security procedures. How important is it if the topic is only mentioned once and never discussed again? Mention cybersecurity and fraud prevention during employee evaluations at least once every year and provide information about the latest hacking schemes.
Employees should be required to password protect their mobile phones. It is important that your employees have a password if they use their phone to perform two-factor verification at the workplace. Failing to observe this practice can leave your business vulnerable if an employee’s phone is lost or stolen.
A little prevention is worth a lot
Prevention and early detection is the key to protecting your business finances. To protect your hard-earned income, you should put in place strong procedures.
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This information is not intended to be investment, tax, or financial advice. For advice regarding your situation, you should consult a licensed professional.