Background checks can help prevent fraud in your small business

Recently SMB Finance magazine published a couple of articles about fraud and small businesses. SMB Finance is a bi-monthly magazine that provides news and resources specifically for financial executives in small and midsized businesses. The magazine is not available online.

One article pointed out that small businesses lose five percent of their annual revenue to fraud. That doesn’t sound like a lot, but it could be the difference between thriving and going under for many small businesses.

Think about it. How much do you have left over after you’ve paid all the expenses? If your business took a hit for five percent of revenue where would it come from? For many small business owners, that five percent would come straight out of their own pocket or income.

The truth is that if fraud hits your small business it will probably be more than five percent of revenue. That figure is the average which means that most of the businesses who do get hit with fraud lose a lot more. That’s why you need to take some simple steps to prevent fraud.

Another article from SMB Finance suggests that having a background check as part of your hiring process is one of the best ways there is to keep fraud away from your door. It’s a simple and inexpensive solution.

Make a criminal background check part of your hiring process. Be sure to use a service, like SentryLink, that provides a check of national records.

Make a pre-employment credit check part of your wall of fraud prevention, too. Use the report to check for possible financial problems and to cross-check information on an application or resume.

These checks will provide the most protection for you if you do them for every employee. And, as always, you need to make sure you follow the rules and get permission where you need it.