Digital technology has brought a lot of convenience and efficiency to business finances. The majority of industries do not have to deal with hundreds of paper checks that come in and go out on a regular basis. With the click of a mouse and a bank account linked, you can send and receive payments.
All that comfort comes with financial risks. Criminals can also access your account via a computer. By keeping your risk-management procedures up to date, you can help protect your company. Three ways to stay on top of your finances, and avoid fraud or errors.
1. Register for Alerts
If your company is fairly small, it’s not too difficult to keep an eye on your finances. You may only have one, two or three bank accounts as well as a company credit card. Your bank or card provider should notify you if there are fraudulent charges on your credit cards or unauthorised bank transactions. A daily routine check, either by you or by an employee, will allow you to detect errors and fraud more quickly.
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After your company has grown, it can become more difficult to manage. Even a small holding firm might have 20 credit card accounts distributed among employees and the owners. Even if an employee or owner of the company is responsible for tracking these accounts, transactions may go unnoticed over a period of days. Time is crucial when a fraudster can charge tens or even thousands of dollars in fraudulent charges over a short period of time.
A minimum of two individuals should sign up to receive transactional alerts. Many banks and payment applications offer these alerts. You can customize them according to the dollar amount and geographic location. Sign up for monitoring applications that are connected to several financial institutions. You can use such solutions to access all of your accounts from one central location without needing to login to different websites and accounts.
2. Pay attention to payee access
You’d think that bank accounts would be one-way. I mean, wouldn’t it be crazy if businesses and other payees could just take money out of your account without asking? Crazy or not, it’s a genuine concern, especially when it comes to payments to and from federal and state governments.
For example, let’s say your business used to operate in California but has moved all services and locations to Missouri. You may still owe California taxes, even if you have completely cut off your ties with California. The state also has access to your account if you paid tax using it. If you don’t willingly pay what the state determines you owe, it can freeze your account or just take the funds. You may have to wait months, or even years, before you get your money back.
That’s why it’s so important to make sure you know which accounts are linked to government entities. If you’re a dentist who contracts with and receives payments from the Department of Veterans Affairs, for example, those funds might travel on a two-way street. That’s why it’s a good idea to have a separate bank account just for government transactions. This will allow you to keep your balances down and prevent a frozen account from crippling business operations.
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3. Employee complacency is a major problem.
In the fight against criminals who want to get access to your personal finances, phishing is still one of the most popular methods. Over 90% of cyberattacks are started by phishing. This includes phone calls and emails that try to fool people into giving out information or clicking dangerous links. The sophistication of a phishing scheme can vary from the sophisticated to absurd.
One of my business partners who ran a CPA small firm was almost a victim in a scam. Someone contacted a new office manager, claiming that they were under contract to provide annual maintenance of printers and ink. Vendor said that their ink refill cost $650 annually and provided information about where to send a check. The office manager was ready to pay up before she checked previous years’ financials and found no record of the vendor. It turned out that the company always bought its refills for $200 annually from a major retailer.
To reduce your business’ vulnerability to criminal financial attacks, employee vigilance needs to be emphasized and continuous. Briefly touching on phishing and other fraud schemes during an employee’s first week on the job isn’t enough. Employees can grow complacent over time about security protocols. How important is it if the topic has only been discussed once? At least one time a year, bring up fraud and cybersecurity during annual employee reviews. Distribute information on new hacking techniques to be aware of.
A simple rule is that employees must password protect their mobile phones. A password will be required if your employees use their phones for two-factor authentication at work. Failing to observe this practice can leave your business vulnerable if an employee’s phone is lost or stolen.
Preventive action is important
Prevention and early detection are the most important aspects of protecting your business finances. To protect your revenue, you should put in place strong procedures.
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This information is not intended to be investment, financial or tax advice. Consult a professional for specific advice about your situation.