Fraud is a major source of financial stress for any business owner. This is because you never know from where it might strike. A small business owner or entrepreneur has to keep their eye on so many aspects of their business life that spotting fraud may be quite difficult until it is too late.
What is Fraud?
In business terms, it is using deceit to enrich your personal finances. This means an employee or client who takes money from your business in one form or another to enrich themselves. This type of fraud when carried out discretely can be quite difficult to detect. Some acts of fraud take place in a relatively short period while others may be going on for years.
In most cases, the fraud comes from an employee with access to the finances of the business. They start using the profits for their personal gain. It can be as simple as not spending the full amount of money allocated for expenses, such as office supplies for example, and keeping the rest. Other examples include intercepting payments to the company and redirecting them elsewhere.
In any event, many acts of fraud can be difficult to detect if you are not carefully watching the books. This is where a professional bookkeeper or bookkeeping services comes in to help your business stay on guard against this type of stealing.
How Proper Bookkeeping Can Help
Virtually every act of fraud can be detected if you employ the proper bookkeeping procedures with an experienced bookkeeper overseeing the finances. By tracking every dollar that comes in and goes out, the bookkeeper will quickly see when and where the books do not add up.
Tracking Expenses: A bookkeeper will look at where your money is going to ensure that it is being directed properly. Money that does not reach the intended target, such as lenders, clients, or suppliers will be quickly seen and tracked by the bookkeeping service or bookkeeper.
Inventory: Regularly inventory checks will also detect if everything is present that has been paid for over time. One of the most common areas of fraud is when employees take from the company not in terms of cash, but by taking items that are intended for company use. A bookkeeper will conduct inventory checks to ensure everything is in place.
Profits: A less common, but still problematic form of fraud is the intercepting of money coming into the company. From taking a little extra cash from the cash register to diverting far larger sums from incoming sales, such discrepancies can be seen by a trained bookkeeper who knows what should be coming into the company.
In your business life, whether as a small business owner or entrepreneur, fraud can cost your company a lot of money. In some cases, fraud has led to the downfall of a business. A knowledgeable, experienced bookkeeping team can help you spot fraud in its early staged and provide the information for you to react before it is too late.