According to PwC’s crime and survey report 2020, companies reported 6 incidents of fraud on average with $42 Billion worth of losses. This amount was compensated from the company’s bottom line with low chances of recovery. Fraud losses are complex and can not always be broken down into financial terms. For this reason, it becomes extremely crucial to develop a fraud management policy to address loopholes in the existing security measures.
Some of the consequences of identity theft and fraud include tarnished business reputation, tax frauds and money laundering. To avoid fraudulent activities, businesses should be aware of all the possible perpetrators. Fraud hits companies from different angles:
- External perpetrators: Customers, hackers and suppliers.
- Internal perpetrators: Middle management, staff and senior management.
- Partnership between external and internal perpetrators
In order to prevent fraud driven penalties and fines, companies should design and implement assessment programs to mitigate risks. One way to do this is to invest in the right technology to monitor business operations in real time. To get started, your company can undertake these 3 effective actions:
Identify, categorize and address potential risks: Companies should develop a mechanism to assess potential risk factors. This can be done by gathering information from external stakeholders and internal management. Once this is done, carry out risk assessment at regular intervals to keep any red flags in check.
Backup software with governance and monitoring: Having the right technology for your business provides robust security against threats. However, this is not enough. It takes good governance, data management techniques and regular monitoring to get the best results even from the right tools.
Take prompt notice: An effective fraud management program requires companies to take quick actions. This can be done by mobilising the emergency response teams to limit potential damage.
The role of asset tracking in fraud management
A robust data security and management system can help mitigate risks associated with fraud and identity theft. Therefore, it is a good idea to invest in a cloud-based software. Asset tracking software is an example of an automated system that records critical information and stores it safely on the cloud. This lowers chances of losing physical data in case of an emergency fraud situation.
Furthermore, a tracking software retains important details like vendor names, maintenance dates and invoices. Password protected access ensures that only the designated personnel can retrieve any business related information.
But companies should understand technology is just part of the answer. A comprehensive fraud management strategy is a combination of regular risk assessment routines and a prompt emergency response team. This can be achieved through an asset tracking software with customized features to cater to your business needs.
Let’s discuss four tips on how a tracking software can help your company tackle common types of frauds with a robust management strategy:
Automate checkouts to eliminate asset misappropriation
Asset skimming or misappropriation is perhaps the most common type of fraud faced by businesses. This involves forged cheques, missing inventory and assets which eventually leads to mismatched accounts. Such incidents are common when companies fail to record transactions at a single source. In this way, poor asset management makes way for fraudulent activities at the hands of employees as well as customers.
To prevent asset misappropriation, companies can automate check-ins and checkouts. This means labelling all your equipment with a barcode so that every time an asset is checked out, it is recorded in your system. Barcode scanning enables you to trace all asset movements and carry out an investigation in case things don’t add up. Easily accessible asset data ensures that the team is ready to spot any mishandling immediately and take necessary actions.
Maintain accurate asset records to prevent tax frauds
Failure to report the company’s earnings results in a tax fraud. Sometimes, poor asset management can lead to expenses being overstated and earnings being under reported. With multiple types of workflows in place, it becomes difficult to track usage of equipment and assets. For this reason, a tracking system enables you to record depreciation for every individual asset.
Regular depreciation measures ensure that all capital owned by the business is recorded at an accurate value. This is extremely important when it comes to filing for taxes. Moreover, some tracking tools also allow you to enter a tax deduction rate of your choice at every transaction. Such practices streamline financial statements and enable companies to file taxes on time.
Customize user roles to mitigate intellectual property and identity theft
As a company in a competitive market, you should have a strict security policy to protect intellectual property. A small lag on your part can end up foregoing sensitive information into the wrong hands. Data and identity theft also qualify as business frauds and hence should be taken under serious consideration while implementing a fraud management system.
Losing valuable business data can mean letting trade secrets out in the public domain. No one wants that right? Luckily, there is one simple way to prevent that from happening. Invest in a tracking software which offers customized user roles. In order to enhance security, set up designated roles and responsibilities while setting up team tasks. For higher level documents, you can restrict access for staff members. This way middle management cannot access valuable information without raising alarm. To catch culprits, you can set your system for alerts in case any of any unauthorized log-ins into the restricted database.
Vet inventory stock to tackle invoice fraud
Another common type of fraud is the invoice fraud where the perpetrator tricks the company into updating the supplier’s payment details. Around 43% of businesses are unaware of invoice fraud and incur hefty irrecoverable losses. If left undetected for a long time, the company could fall in huge debts under payments for products never actually received. In order to avoid such problems, inventory tracking should be a key part of your fraud management strategy.
By using an asset tracking software, companies can automate inventory and stock modules. This means that every time stock is requested by a staff member and it will be approved by the admin before the payment receipt is generated. Different stages of approval mean that there is a lower chance of fraudulent requests getting through. Apart from this, the tracking system also enables you to save vendor information for future transactions. Make sure you only redirect inventory requests to reliable vendors on the company platform.
The last step is to double check all inventory items once received. A tracking software enables you to label each item and then scan the barcodes to enter new stock. This practice maintains transparency and ensures none of the items get missed out on.
Implement tight security against fraud schemes to improve bottom line
With the number of fraud cases on the rise, the key to preventive measures is regular assessment cycles. Start by calling out small incidences to instill a sense of accountability within the company employees. The best way to go about it is to make fraud reporting a part of the corporate culture. Get together a small group of trustworthy people and ask them to point out any red flags anonymously.
To control the impact on your bottom line, establish strict anti-fraud policies. Clearly state the repercussions for anyone found to be violating the policies. Lastly, conduct frequent audits to ensure all assets and their corresponding financial statements are in order.
Fraud management is not a last minute emergency plan. It is a long term strategy which evolves as the business grows. Keep in touch with the latest legal guidelines and update your policies accordingly. And remember technology alone cannot prevent fraudulent activities. You have to train your employees to practice certain standard operating procedures to mitigate potential risks everyday.