How To Avoid Fraud

How To Avoid Fraud

February 6, 2024 by investor

How To Avoid Fraud

Fraud can be costly to a startup.

Take these steps to avoid fraud in your business.

Separate accounting duties — have at least two people handling the accounting and separate their functions.

Know your team — run background checks on new hires and know your business partners’ history and background.  

Oftentimes it’s the most likable people who commit fraud.

Set up internal controls — audit the accounting books and require sign-offs and approvals for expense payments.

Protect bank account and credit card information — separate personal and business accounts and move bill payments online to avoid check fraud.

Review bank accounts regularly for unusual transactions.

Audit the books annually — have an outside accountant review the books to prevent fraud.

Use certified fraud examiners to review suspected cases of fraud to help with the prosecution of the case. 

Train your team — make sure key people in your organization know how to detect fraud and what to look out for.

Implement these steps to avoid fraud in your organization.

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Music courtesy of Bensound.

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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.