How To Avoid Becoming A Victim Of Business Financial Fraud

How To Avoid Becoming A Victim Of Business Financial Fraud

As a business owner, you must know how you could become a victim of financial fraud. Several scams explicitly target businesses and their owners, from identity theft to embezzlement.

Most common types of business fraud and what you can do to avoid them:

1. Identity theft 

Identify theft occurs when someone uses your business’s name, EIN, or other identifying information without permission to obtain credit, open new accounts, or commit other crimes. Keep all sensitive information in a secure location to protect your business from identity theft, and only share it with trusted employees and vendors. You should also regularly check your business credit report for any suspicious activity.

2. Embezzlement

An employee steals money from your business by falsifying expense reports, doctoring invoices, or skimming cash from sales. To prevent embezzlement, carefully review all financial documents before approving them for payment. You should also conduct regular audits of your books and have a solid system for tracking inventory and revenue.

3. Investment scams

These scams can take many forms, but they all involve someone convincing you to invest in a bogus project or product that doesn’t exist. To avoid being scammed, do your research before investing any money and be sure to consult with a financial advisor you trust. Also, be wary of anyone who guarantees high returns with little to no risk involved.

4. Credit card fraud

As its name suggests, credit card fraud occurs when someone uses your business’s credit card information without permission to make unauthorised purchases. To prevent credit card fraud, keep your cards in a secure location and never give out your account number or PIN to anyone. You should also regularly check your statements for suspicious activity and immediately report fraudulent charges to your credit card issuer.

5. Cybercrime

This fraud involves using technology to commit crimes such as hacking into computer systems or stealing data like customer credit card numbers. To protect your business from cybercrime, use strong passwords, install security software on all devices, and never click on links or attachments from unknown sources. It would help if you also had a plan to respond during a data breach.

6. Payroll Fraud

Payroll fraud occurs when someone steals money from the company by manipulating the payroll system. This can be done by creating fake employees or inflating hours worked. To prevent payroll fraud, again, be sure to have strong internal controls in place and perform regular audits. It would be best if you also considered using a biometric timekeeping system to eliminate the possibility of employees clocking in/out for each other.

7. Inventory Fraud

Inventory fraud happens when someone steals inventory or records it incorrectly to pad their pockets or make themselves look good. To prevent this fraud, conduct regular physical inventories and compare them against your records. You should also limit access to inventory to only those who need it.


As a business owner, you must know how you could become a victim of financial fraud. By being informed about the most common types of business fraud and taking steps to prevent them, you can help keep your business safe from scammers and con artists.

At Tianlong Services, our dedicated team helps small business owners better manage their business safely and securely through a range of services, from accounting bookkeeping services to tax filing. We can assist in all the financial matters, including examining and validating chart of accounts.

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