Whilst we are technically past recession and (depending what commentator you listen to) things are looking up, in reality things are still tough for many businesses and there could well be a few bumps and scrapes on the way to recovery.

Many businesses’ main concerns are about generating business, managing costs and the bank balance.  Fraud prevention is probably not high on the list.  After all it is not going to happen to us, my staff are trustworthy there is no way they would commit a fraud and putting in anti fraud measures would add to our costs and could perhaps even be de-motivating.

Whilst many businesses are minded towards being lean and mean in order to keep costs low, measures that (wittingly or unwittingly) helped prevent fraud may be removed.Perhaps perversely, difficult times create circumstances where previously trustworthy people perpetrate fraud.

Increased risk and increased opportunity, means that there is a higher likelihood of fraud occurring.  This outcome has been borne out in a recent Telegraph report that said that the KPMG Fraud Barometer recorded a sharp increase in fraud in 2010. The KPMG survey deals with frauds over £100,000 that have reached the High Court, and as such could be regarded as the tip of the iceberg! I am sure that SMEs are not immune to the trend.

Large companies have internal audit and a large number of staff, allowing easy segregation of staff duties (important for fraud prevention); they also have formal policies regarding authorisation of transactions. At the other end of the spectrum, a one man band will (or at least should) be in complete control and require no formal processes. For the businesses in between, it can be a bit trickier.  For many SMEs, it is common for processes to evolve in a culture of trust and as a result there may be little segregation of duties and limited authorisation procedures. An SME with 20 staff may be sufficiently devolved and complex that the owner is not involved with day to day transactions, but it wont have the staff resources of its larger counterpart.

It could be you was the strap line in the early days of the National Lottery. Most of us enter the lottery with a hope of winning a big prize, although the chances of winning something life changing are pretty remote – after all if you aren’t in it you can’t win it.

You don’t have to a buy a ticket for the fraud lottery, you are in it!  Hopefully your ticket won’t come up and if it does it could just be the £10 prize (although even that can leave a very sour taste), it could be more and of course, winning the jackpot could change your business forever!

Whilst it could be you, in reality its not really a lottery as there are things you can do to reduce the chance of your ticket coming up. Some not only reducing the chance of fraud but perhaps also driving real improvements in your business! I’ll talk about that in my next blog, although if you want to get in touch beforehand please contact me, David Lewis on 07836 331677 or e-mail david@camroseconsulting.co.uk.