Meanwhile, incidents of fraud are increasing. Each week, banks review more cases of check and identify fraud than ever before, especially as computers and printing technology provide avenues for criminals to access company information.
Security measures can prevent financial information from leaking out of authorized hands. Business owners need to establish a system for check authorization, segregate bookkeeping duties, and ensure that all corporate and personal banking information is regulated and stored under lock and key.
Clean out carefully
Fraud can originate in unlikely places. Even company trash bins can serve as a gateway to criminal activity.
Refuse containers are often collection points for valuable corporate documents such as employee records, check copies, voided checks and check registers, tax returns and other documents that reveal financial information.
Do not dispose of these records without first shredding or incinerating them. You can purchase a paper shredder and destroy documents in-house, or outsource the service to a company that will remove trash to a secure Dumpster, where it is incinerated.
Cut out counterfeit checks
Advanced copy machines and laser printing equipment open doors for check duplication. Many small- to mid-sized business use company equipment to print checks, which means they store blank check stock in their facilities. If unauthorized people have access to blank stock, they easily can develop checks for significant dollar amounts and cash or deposit them.
Prevent fraudulent check activity by purchasing quality check stock. Invest in security features such as watermarks, raised seals or marks that can be detected only by black light. While these details might cost more than plain check stock, all it takes is one cashed fraudulent check to make up for the difference.
Also, establish dual accountability when employees sign for check stock. Do not allow only one employee permission to remove stock, print and administer checks. On the same note, limit check signing authority. Only officers and a controller or bookkeeper should hold check-signing authority.
Balance books regularly
Review bank statements immediately, watch for cleared checks and, if possible, view your account for activity daily. Online banking tools allow business owners to check current account status.
By catching mistakes before they are buried under a list of transactions, management is more likely to pinpoint fraudulent activity and prevent future occurrences.
Personal credit cards
It is not uncommon for company officers to give their personal credit card information to key support personnel. But before granting this permission, discuss appropriate use of personal credit cards perhaps to book airline tickets, hold hotel reservations, purchase gifts for clients or handle personal matters carefully detailed by the manager.
Do not leave use discretion to others who hold your personal credit card.
Don’t pile bank statements, tax forms or other vital financial records on a desk. Loose documents invite wandering eyes and criminal activity. Labeled folders are also risky resting spots for this information if they are stored in accessible cabinets or desk drawers. Lock up documents or leave bank statements at home to avoid temptation.
Some companies install security cameras, which serve dual roles as watchdogs and preventive devices. Installing cameras in areas where check stock or financial statements are stored is never a bad idea.
Employers can build an in-house security system of sorts by simply training employees to watch for fraudulent activity. Conduct a session to inform workers on common security pitfalls and how the company will address these risks. Explain procedures for check authorization and financial information disposal and encourage employees to report unusual activity to managers.
Train, don’t just trust, your employees. Your security depends on building a protected corporate environment and communicating the importance of keeping financials under lock and key.
CRAIG JOHNSON is president and CEO of Franklin Bank in Southfield, Mich. Reach him at (248) 386-9860