3 Ways Businesses Get Ripped Off By Dishonest Employees


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Small businesses and nonprofits are more vulnerable to fraud than larger organizations, and the effects can be far more damaging.

Considering potential losses, small-business owners need to make the prevention of fraud a priority in their businesses.

Mitigating fraud starts with being able to prevent and identify it in your company. In this episode of Path to Profit, host Stephen King, CEO of Growthforce, shares real stories of internal fraud and what to do in preventing it.

Specifically, he covers:

- An example of bill payment fraud from a nonprofit that outsourced its CFO.

- Common forms of expense reimbursement fraud.

- A story of an ingenious bookkeeper that committed payroll fraud.

No system of internal controls will eliminate all fraud, but GrowthForce has some tips to help you minimize that risk. Visit our website and sign up for our webinar, where we’ll show you what you can do to reduce your risk of fraud.

Detecting, Preventing and Reducing Fraud in Your Business Webinar Sign Up! >>> http://bit.ly/P2P_Fraud

You're listening to pasto profit, apodcast looking at business growth from every angle possible if you're lookingto hear stories of success and failure, lessons learnd from leaders that havegrown and scaled their businesses you've come with the right place. Let'sget into the show hello, and thank you for listening tothe path of Prophet podcast. My name is Martha. Devay, O Director of MarketingHerad Girld, force to day Stephen King C yo of Birlchorse, will be discussinginternal fraud. You'll hear real stories and learn how you can preventfraud from happening in Your Business Hi, I'm stepen King and to day. I wantto share with you a strory about bill payment, fraud, expense, reembursementfraud and payall. Fraud. First is destroy about a nonprofit in WashingtonDC that outsourced it C fol position and encountered bill payment fraud.This is the most common way that small businesses and nonprofits get rippedoff. Has It happened? Well, first, they can send a bill from a fake company.Second, they can submit an expense for...

...personal items or third, they can makemultiple appointments from a legitimate vendor, but submitin voices without anydates. That's what happened to our nonprofit clant, the CF would invoicethe client monthly at the beginning and then over time, the period betweeninvoices shortened to eventually they were getting in a voice for every threeweeks. As a result, that nonprofit was paying twenty five percent more fortheir CO services. That's the number one way that small businessis incounter fraud expense reembursement fraud. This iswhen it employes sobbits a fake or inflated expense report to an employerand then gets paid, for there are four types to that kind of expense.reumbursement first is mischaracterized expenses. This is when somebody takes apersonal expense as an and then submits it as a business expense. You know thestory, it's a personal dinner with...

...their family that they submit. As ofteam building exercise. The next is overstated expenses exexpensrepots thathave been adjusted by someone to get more back. You know you got a fifty dollar bill for a mealand you Adda one in front of it and now you're getting reimbursed a hundred andfifty bucks. You pocket that hundred olars. The third is fictitious expense,expense reports for business expenses that were never made or multipleexpenses for the same receipt. So if somebody has a hotel expense, theysubmited and then they submit the same expense next month by submitting a copyof their credit card statement. Those four scenarios account for nearlyfifteen percent of the fraud in small businesses and non profits, and theaverage loss is forty thousand bucks. Third is a story about parol fraud.This enbols, an inteor designer, had a bookkeeper who did everything. Perellfraud cases have the highest median...

...average losses, so they waren't extracare and focus to make sure you are not getting ripped off. How does it happen?Well, one of three ways: first, your a bookkeeper can inflicte the number ofhours they worked or give themselves some overtime to get paid. Second, theycan create fake, employs, or ghost employes and pocket that paycheck orthird, with access to the payroll they can inflate their salary or steal thetax deposit. This case was an ingenious bookkeeper who did everything they hadediting rights to the paroll changes section inside quickbooks and what theydid was they paid extra into the monthly payroll tax depatets then whatthey did was they credit that extra payment to their account of their taxwithhold it and they claimed the amount as a refund on their W to they addedfive thousand dollars a month to the...

Payrell tax deposit, which is reallynot a number. That's easy to compute. It's based on how many employees youhave whether they're salaried or married, how many exemptions they haveand then what they did was they went into their own W to and their payrolltax return and they credit it to themselves. So they could get a bigsixty housand dollar refund at the end of the year, and because the bookkeeperdid everything, the CEO would never have detected it unless somebody waslooking at the payroll tax adjustment records. This is just one way thatsmall busiesses get ripped off now no system of internal controls will helpwill eliminate all fraud, but we have some tips to help. You minimize thatrisk visit growth, forcecom and sign up for our Webban awe will show you thetop three ways that small businesses and nonprofits get ripped off and whatyou can do to reduce your risk of fraud. Growth Corse is the smartback officesolution that CEOS need for better financial management, their business,delivering a level of reliability,...

...consistency and expertise that istypically reserved for midmarket companies from advanced bookkeepingmanagement, accounting, controller and advisory services. Growth Forceprovides dedicated teams and cloud based technology. Tit becomes ascalable solution for your business. We meet you where you are to learn morevisit. Growth, Forcecom you've been listening to path to profit, to ensurethat you never miss an episode subscribe to the show in your favoritepodcast player. If you're listening an APPLAE, Pidgast we'd love for you togive a quick grading show just tap the number of stars. You think the podcastdeserves. Thank you so much for listening until next time.

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