Internal Fraud Is More Common Than You Might Think
For many entrepreneurs considering payment fraud, what usually comes to mind is stolen credit cards and hacking by cybercriminals. What most people fail to realize is that perhaps the greatest danger lies within the company. Although the vast majority of the employees are trustworthy, the presence of just one untrustworthy employee poses a great risk.
However, employee payment fraud is completely avoidable provided that the necessary procedures and payment processing tools are utilized.
Understand the Most Common Types of Fraud
There are various ways through which an employee can indulge in fraud when it comes to their payments. An employee can indulge in fictitious refund processing, void transactions after customers leave, offer unauthorized discounts or even take money from the till by changing transaction entries.
Use Your POS System to Your Advantage
Today’s modern point-of-sales systems provide features to prevent fraud and increase accountability. Employees’ individual log-ins provide an audit trail for the transactions processed by employees, whereas permission levels give managers the ability to dictate who is able to refund transactions, cancel sales, or adjust prices.
Activity reports provided by many modern POS systems can reveal any fraudulent activities if reviewed regularly.
Create Strong Internal Controls
Technology alone does not solve everything. Policies regarding refunds, discounting, and cash should be developed by companies. Assignment of duties, requirement of managers’ authorization for some transactions, and conducting regular cash drawer counts are measures that will substantially minimize the risk of fraud.
Moreover, employees are less likely to commit fraud knowing that their activities are monitored.
Build a Culture of Trust and Accountability
The aim is not to make people suspicious about their own firm. The objective is to safeguard your firm and its employees with proper guidelines.
Proper training, good documentation, and good communication make it possible to build an environment of honesty and accountability within the organization.
Prevention Is Always Better Than Recovery
The cost of recovering from employee fraud can be high. However, fortunately, most instances of employee fraud can be prevented by employing state-of-the-art payment processing systems coupled with strong internal controls.
Through the utilization of the reporting capabilities of your payment processing system, restricting access for employees and reviewing transactions, you can safeguard your company and yourself while minimizing risks of fraud.
