How to Protect Your Business From Money Fraud

As a small business owner, you might be forgiven for thinking that you’re not likely to be the target of fraud. After all, why would anyone come after you when there are bigger fish to fry?

In fact though, small businesses are often the targets of money or payroll fraud because they are less likely to have the right security and processes in place to defend themselves. If you own a high street store or any other business that sells directly to the general public, then you are particularly at risk of money fraud, so it is very important that you put precautions in place to defend yourself.

Here are some of the most important things to do to protect your business from money fraud.

Look Out for Counterfeit Money

One of the simplest forms of money fraud that is likely to occur on a face-to-face basis, especially if you run a cash-only business, is the use of counterfeit bills. Counterfeit money looks like real money at first pass and takes closer inspection to identify. Hold the note up to the light and look for the holograph of the face on the bill. Looking through light should also show a vertical strip that contains text spelling out the denomination.

Learning how to tell if money is fake can be difficult, but there are a multitude of tools for checking counterfeit money. The most important step is to train your staff in what to look for and what steps to take. Also important is training them on how to deal with a counterfeit bill when they find one. This should not mean making accusations – after all, the customer may have been a victim of fraud themselves!

Look Out for Fraudulent Credit Cards

It’s not just cash that can be counterfeit; fraudulent cards are also a big problem, and this is something else that you and your staff need to be on the lookout for. Cards can be forged, counterfeit, cloned, or just plain stolen. Be on the lookout for all these things.

Once again, this will largely come down to training and vigilance on the part of your staff. Make sure that they are familiar with what the most prominent cards should look like. Get them to check the signature on the back of the card if the customer is signing their purchase. Have them check the name as well, in case there are any obvious discrepancies (are they the right gender, for instance). And finally, consider using the Luhn algorithm to ensure that the card has an obvious number.

Install Cameras

It’s important to recognize that not all threats come from outside your organization; some come from within. While it’s nice to try and cultivate a culture of trust within your organization, you also need to be realistic, and that means keeping an eye on your staff to ensure they aren’t skimming cash “off the top” of your daily receipts or pocketing tips. Install CCTV (closed-circuit television) for their safety and for the safety of your customers… and also so you can keep an eye on proceedings.

And remember: if your team is standing around not doing anything when they should be working, that’s a form of stealing from your business, too.

For other kinds of business, more complex security measures might need to be put in place to control access for different members of your team. Do keep in mind that the most common type of theft against business is internal and involves the unlawful transfer of money.

Consider Your Policies

Are your policies leaving you exposed to fraud? Sometimes the best defence is simply to use strict rules that define your interactions with staff and customers. This can mean not accepting payments over the phone, asking for proof of address, or not accepting checks. Whether or not these policies are suitable will of course depend on the nature of your business, so it is up to you to weigh offering the best customer service versus exposing your company to potential risks.

Protect Your Data

Just as you should shred any personal mail that includes your details, so too should you be sure to properly dispose of bank letters or even addressed mail delivered to your company. Likewise, any other data that could be used to access your accounts should be disposed of properly and thoroughly in an effort to keep your accounting records secure.

Get Insurance

One of the best ways a business can protect itself against fraud is to investigate a few types of small business insurance. Look for a management liability insurance policy with a ‘crime extension,’ which should cover you against a number of different types of fraud.


These are just a few of the ways you can protect your company against money fraud. Depending on the nature of your organization, there are more specific measures you can put in place to keep your business safe. The most important takeaway is simply to be aware of the dangers that can come from within and without and to implement the right systems and policies to help minimize risk.

These views are made solely by the author.

Alex Reichmann

Alex Reichmann is the CEO of iTestCash and supplies businesses with retail products across the United States.
These views are made solely by the author. Patriot Software is not affiliated with, and does not necessarily endorse, the products mentioned in the article.

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