Protecting Your Business from Fraud: Practical Steps Every Organization Should Take

Fraud is no longer limited to large corporations or financial institutions. Small and mid-sized businesses are increasingly targeted through phishing emails, fake invoices, payroll scams, and unauthorized account access. The good news? Many of the most common fraud schemes can be prevented with a few proactive safeguards.

Below are practical steps every business can take to reduce risk and protect financial and sensitive information.

1. Strengthen Internal Controls

Clear processes and checks help prevent fraud before it happens.

• Separate duties whenever possible (for example, the person who approves payments should not also issue them).

• Require dual approval for wire transfers, ACH payments, and large expenditures.

• Regularly review bank statements, credit card activity, and vendor payments for anomalies.

2. Train Employees to Spot Red Flags

Your team is your first line of defense.

• Educate employees on common scams such as phishing, spoofed emails, and fake vendor requests.

• Reinforce that urgency (“pay immediately” or “act now”) is a common fraud tactic.

• Encourage employees to verify unusual requests through a second channel (phone call or known contact).

3. Verify Changes to Payment or Banking Information

One of the most common fraud schemes involves changing payment details.

• Never accept changes to vendor or employee banking information without verification.

• Require written documentation and direct confirmation with a known contact.

• Maintain a formal process for updating financial records.

4. Secure Systems and Access

Technology safeguards play a critical role in fraud prevention.

• Use multi-factor authentication (MFA) for email, payroll, banking, and financial platforms.

• Limit system access based on job responsibilities.

• Keep software and security patches up to date.

5. Monitor Payroll and Benefits Closely

Payroll and benefits systems are frequent fraud targets.

• Review payroll reports before processing each pay cycle.

• Regularly audit employee lists and benefit enrollments.

• Ensure terminated employees are promptly removed from all systems.

6. Establish a Culture of Accountability

Fraud prevention works best when accountability is part of daily operations.

• Document financial and approval processes clearly.

• Encourage employees to report concerns without fear of retaliation.

• Periodically review policies and update them as the business grows.

7. Know What to Do if Fraud Occurs

Preparation can limit damage.

• Act immediately by contacting your bank or payment provider.

• Change passwords and secure affected accounts.

• Document the incident and consider involving legal counsel or law enforcement if appropriate.