Some reports indicate corporate fraud leads to 5 percent revenue loss in the average company. This is according to research from the Association of Certified Fraud Examiners. They also found that global fraud loss totals around $3.7 trillion a year.
In the same report, the median loss per company was $145,000, but 22 percent of the cases had at least one million in losses. The most common types of frauds occurring in businesses were asset misappropriation, corruption schemes, and financial statement fraud.
The industries most vulnerable to fraud according to the study? Banking and financial services, government and public administration and manufacturing industries.
The numbers can be scary, but there are steps that can be taken to reduce fraud in the corporate world, or at least detect it more quickly.
Automate Wherever Possible
Whenever automation can be introduced into a business, it can help reduce the risk of fraud. One example is invoice automation software. Invoice automation software can help provide centralized visibility and red flags are more easily spotted than with manual processing.
Automation also allows for systems to be more structured and for frameworks to be set that can significantly reduce the risk of fraud. There’s also the added advantage of reduced errors that comes with automation as well.
Conduct Regular Risk Assessments
It’s important in a business of any size to know where potential risks exist so that you can close the gaps. There are going to be some areas where your business is more vulnerable than others. You want to focus on reducing fraud across the board, but if you conduct regular risk assessments, you’ll be better prepared to do that.
Be Aware of Employee and Internal Issues
With fraud, there are often behavioral traits and red flags that might be spotted before anything actually occurs. Managers and company leaders should always be looking out for these red flags.
If an employee, for example, has a change in attitude or their behavior seems to shift, there might be a reason for it. If an employee never wants to take a day off work that could also be an issue.
Train managers to stay engaged with employees and have conversations with them to get a feel for where they’re at, at any given time.
Train Employees on Fraud
The more employees know about the red flags and warning signs for fraud, the more likely they are to be able to see it around them and report it. It can also be helpful to train employees on fraud so that they are aware that it’s something that it’s important to the company they work for and they’ll be less likely to commit it themselves.
Fraud is something that is often changing and evolving, and it’s important to regularly update policies, methods of detecting fraud and employee training as well. Also, don’t underestimate the value of an employee tip system. Employees need to be trained on the specifics of fraud and also guaranteed that any tips they make will be dealt with anonymously.