Fraud is a significant issue for small businesses.
Around 31% of all instances of fraud are reported by small businesses, which is a far higher figure than for larger enterprises. While smaller businesses tend to experience organisational fraud more often, these are also the enterprises that tend to be the worst affected by it and where recovery can take far longer. But could working with accounting software help to reduce fraud?
Where smaller businesses are the most vulnerable
Statement fraud and asset misuse are two of the three most common types of fraud experienced by smaller enterprises. However, it’s theft that tends to cause the most problems, from stolen cash to claims for expenses that don’t quite add up and instances where employees have stolen property from the business. The right accounting software has a role to play in reducing the opportunity for this kind of fraud and ensuring that it doesn’t go unchecked.
Making accounting systems more transparent
One of the key factors in enabling fraud in smaller businesses is a set up where there is just one employee responsible for all of the accounting and book keeping functions. The risk increases significantly if those accounting and book keeping functions are either not online or are organised via a chaotic system of documents and spreadsheets. Accounting software introduces transparency and ensures that it’s almost impossible to try to hide or disguise fraudulent behaviour.
Introducing robust, versatile controls
Working with accounting software provides the opportunity to introduce controls when it comes to systems and information. For example, employee access to financial data can be restricted, as can access to inventory or stock information. Multi-person sign off can be required for the processes most likely to become the subject of fraud, including expense claims or overtime claims.
Easier auditing
One of the major benefits of accounting software is the ease that it introduces when it comes to auditing accounts and financial statements. This makes spotting fraud a much more simple task because auditing and reporting can be carried out on a regular basis without excessive effort. There are some areas that are high risk and should be regularly checked and audited, including cash accounts and accounting and book keeping processes.
Accountability and deterrence
Accounting software provides clear lines of accountability so that it’s much easier to trace back to the origin of fraudulent behaviours or actions. This often has a deterrent effect on employees who might feel like a small fraud is something they could “get away with” without such a system in place.
Training staff to help spot fraud
While staff can be the biggest threat when it comes to fraud they can also be the most effective defence too. When you are working with clear, simple accounting software it’s much easier to give your staff the tools to spot fraud on your behalf. That way it’s much less likely to simply go unnoticed.
If you’d like to find out more about the benefits of accounting software for your business – whether large or small – get in touch.
If you have any questions or would like to speak to a NetSuite or SunSystems expert, get in touch with us today.
