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Life After Fraud: How Small Businesses Can Recover from a Hit

Contributed by Lindsey Weiss 

Fraud affects thousands of businesses across the country each year; whether it’s from a dishonest employee, an internet scam, or from a hacker who finds a way to access your company’s files, you may very well face some form of fraud during your time as a small business owner. It’s an unfortunate part of the business world that causes quite a bit of havoc, especially for those with clients who have sensitive data exposed. Protecting your business — and your customers — is a major priority, and when something unforeseen happens, it can be devastating.

Fortunately, there are some things you can do to recover from fraud and get your business back on track. Not only that, there are many ways you can protect your business from further intrusions; preventative measures are important when it comes to keeping your information safe. It will also help if you truly understand the effects of fraud and all the different methods that can be used to perpetuate it, as well as the most commonly affected areas: assets, payroll, accounting, data, and vendors.

Because small businesses are more at risk for employee fraud than bigger ones, it’s essential that you not only hire people you trust but that you also stay organized and keep communication open with the person who handles the bookkeeping. If you stay up to date on your company’s finances, there will be less room for someone within the company to be dishonest. And due to the Sarbanes-Oxley Act (SOX) of 2002, it’s up to the company to protect its customers and clients from fraudulent activity, and failure to comply with the act could land your company in very hot water. This includes disclosing any possible problems to the public in a timely manner.

Here are a few things to think about, plus several ways you can help protect your business.

Remain discreet

As soon as you learn of any type of fraud — even if it’s only an allegation at first — it’s critical to investigate quickly and remain discreet. The more you can learn without letting the perpetrator know, the better. Informing your insurance company right away is also important, as there may be a specific window of time when you must file a claim. The faster you make a move, the better your chances will be of recovering your assets. As soon as possible, go through your records and gather all the data you can in relation to the fraud. This might include receipts, payroll ledgers, or bank deposit paperwork. Keep it all together in a safe place so that when you need to access it, you’ll have it at the ready. If you lack an IT department, now is also the time to enlist the help of professionals trained to handle these sorts of breaches. Sites like Secure Data Recovery are able to investigate and shut down any lingering issues in order to get you back up and running.

Assess your payment options

When it comes to choosing the right payment options for your business, you want to find one that not only allows for the most convenience for your customers but one that also has built-in security features that will keep data safe. If your current software and hardware doesn’t have a history of protection, consider upgrading to a new system that will make data security easy. It may take some time to install and get used to a new payment system, and you’ll need to work in training hours for your employees, but it will be well worth it for the benefits it brings your company and your customers.

Change your passwords

Every business has turnover; that is, no matter how hard you try to retain employees, there will always be a few that don’t work out. It’s crucial that you not only keep track of everyone who has access to important information — such as passwords or customer files — but that you also change the access keys to that information after an employee leaves. While no employer likes to think about a once-trusted worker taking advantage of their position, it’s an unfortunate fact that it happens. It’s also a good measure to review internal controls now and then to look for fraudulent activity; if fraud has been committed, having a second pair of eyes will help expose it.

Thoroughly research job candidates

Doing your research when it comes to hiring practices is extremely important in protecting your business. To avoid dishonest employees from slipping through the cracks, it’s best practice to screen candidates carefully before adding them on to your staff. It can be time-consuming — especially when you already have a lot on your plate as the owner — but it’s a crucial step in making sure your business and your customers will be protected. Know what to look for on a resume, and get an idea of what might be a red flag, such as large gaps in employment or skills listed that don’t correspond with work history.

Protecting your business from fraud and learning how to recover from it can be an overwhelming task if you aren’t prepared. Remaining calm in the face of such a situation will help you stay organized and efficient, which is the best way to fight back. Remember that time is of the essence, as is keeping detailed records in order to cover your assets. With some research and a little preparation, you can make sure your company is secure.