Many small businesses should maintain an in-depth look at their payroll services, whether it takes place in house or via a third party. It can take time to implement the proper controls takes time, but it will prove to be a highly cost-effective measure to stop or prevent any fraud or leakages. Here are a few aways you can avoid small business payroll services fraud.
1. Duplicate Payments
These are one of the most common types of payroll fraud. However, not all duplicate payments are intentional payroll fraud and can be simple computer error, vendor error, and even human error. But this error is both preventable and recoverable. Duplicate payments often occur when setting up some sort of reoccurring payment. For example, say you decide to pay your regular contractor by direct deposit where the company takes their payment automatically. Your payroll department may continue to pay the contractor because they don’t know. The contractor may accidentally bill and collect. Or your software may commit an error. This is why we recommend having an experienced bookkeeper go over everything with fresh eyes. Don’t believe us? Read more on this $20 million payroll fraud scheme.
2. Follow the Numbers
Your swindlers may not be too bright when it comes to intentional fraud. Fraudsters within and without your business get to know certain things. One of the most prominent is approved expenditures. Say your business allows $1,000 for a certain expense. Is the charge for this expense constantly just below? Say around $990 to $999? It’s unlikely the vendor charges that much. We recommend auditing these particular charges. In addition, we also see some fraudsters not take the time to come up with a custom amount. The charge will often end in $.25, $.50, or even $.00. Do these types of charges often reoccur? You may want to look into them as well to ensure they are legitimate.
3. Estimate Fraud
Have you had one of your workers gather estimates for a certain project? We recommend going over them yourself or having another third party do so. These estimates can be easily manipulated to say whatever they want. You may want to confirm with the vendor to know if the estimate is accurate. You may also want to research the vendor themselves to make sure they are on the up and up.
4. Best Way to Avoid Small Business Payroll Services Fraud
From experience, we can tell you the best way to avoid small business payroll fraud is to hire an experienced bookkeeper in your area who knows a legitimate business expense from a fraudulent one. This includes over payments, payments for workers no longer with your business, payments to unapproved third parties, and more. You can get a bookkeeper on a one-time surprise basis to go over everything, as well as get one on a monthly basis to approve all payroll items.
Avoid Small Business Payroll Services Fraud in Houston
Feel free to contact us for to learn more on how we can help you avoid small business payroll services fraud. We proudly serve businesses in Houston and the surrounding areas who need bookkeeping and payroll services.
