Small businesses tend not to have the same safeguards in place as larger enterprises when it comes to time and billing compliance
. Due to their limited segregation of duties and the fact that they often lack comprehensive internal controls, small companies are at an increased vulnerability for being preyed upon by scammers, according to Fox Business' Small Business Center.
There are numerous different ways that fraudsters can target small businesses. For example, people running phony grant schemes promise victims extensive government grants of hundreds of thousands of dollars within a two-year period—provided they pay processing fees of up to $5,000 first, of course. Meanwhile, operators of other scams put together fake bills or notifications of small business billing compliance
failures that look sufficiently official and include enough data about targeted companies to make them seem reliable. Many small businesses simply assume the communications are above-board and pay the fees without conducting any further research into their legitimacy, particularly if the amounts requested are not particularly large. The inclusion of pressuring language, such as notifications that payments are past due, is another extremely effective measure in terms of persuading businesses to pay up without asking questions.Knowledge is the best protection
When it comes to protecting small enterprises against these types of scams, knowledge should be the first line of defense, according to the Better Business Bureau (BBB). Companies that receive bills or noncompliance notifications are encouraged to check sender names against the BBB's list of reputable enterprises in order to ensure they are not being victimized by scammers.
"Just like with customers and clients you need to know who you pay money to and need to follow the rules," said Julie A. Mucha-Aydlott, a certified fraud examiner and accountant, as quoted by the news source
. "The small business owner needs to be involved in the finances and not look the other way because he or she is too busy."
Staying on top of accounts payable and receivable is another way small companies can reduce their vulnerability to fraud. Specifically, attention should be paid to:
- Checking account maintenance
- Balance sheets
- Account reconciliation
- Income statements
- Billing optimization
- Bookkeeping and accounting outsourcing
- Credit card use
- Time tracking
- Record retentionTime and billing software
, such as Sage Timeslips, can help small enterprises keep track of all these moving parts, facilitating daily business processes and safeguarding against fraud.