Small businesses are just as vulnerable to fraud committed by employees as large companies, and often it never comes to light. Here are six ways to help prevent internal fraud:

1.) Be aware of short holiday syndrome

Because bank cheques take roughly four days to clear, someone using multiple bank accounts can cover fraudulently drawn cheques. Using three or more accounts means that there are always funds to meet the next cheque to be presented.

2.) Verify qualifications

If someone works for you with little or no supervision, it’s a good idea to make sure they’re doing their work. The trusted new employee could be an unqualified fraudster who knows just enough about your business to get the work outsourced to freelancers, suppliers or subcontractors.

3.) Review the credit checking

Every business runs credit checks on new customer accounts, but there is the possibility that one of the people responsible for doing the checks could set up a bogus customer account, approve it, then start supplying to a non-existent customer. Your accounting system would probably be fooled, and if you throw in a few regular refunds for non-existent supplies and someone has a damaging systematic fraud in progress.

4.) Instigate separation of duties

There will always be unscrupulous suppliers who are prepared to make it their business to get too close to buyers for everyone’s comfort. Any suspect purchase must to be overpriced to offset the “kickback” and every overpriced purchase causes damage to the health, viability and competitiveness of the business.

5.) Beware the habitual early starter

Having a member of staff who invariably arrives earlier than anyone else can be great for the business but it’s a good idea to ask yourself why they should be so dedicated and keen, particularly if they are not in a senior position. It could be that they need to be first to reach the post in the morning and fraudsters can escape discovery for months after ordering supplies or making purchases charged to the company’s account.

6.) Rotate bank signatories

Even partners, co-directors, fellow shareholders and employees with years of loyal service can be tempted to stray from the path of honesty when they are habitually handling large financial transactions. Covering the administrative tracks of a missing cheque for a significant amount of money is not difficult.

It is often the most amiable, agreeable and well-liked individuals who con their way into legitimate businesses with criminal intent, and their victims are often well-seasoned business people. By introducing simple but effective control measures, the opportunities for fraud can be eliminated.