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Small Business Fraud Prevention Checklist

Starting your own business is an achievement. You need to work hard and be consistent to reach your business's full potential. Unfortunately, there are people in this world that only work for their own advantage and want to take advantage of others to achieve their goals. While some people do this with dedication, others do it through immoral processes.

fraud prevention checklist

Fraud is one of the themes no one wants to talk about until it happens to them. In this fraud prevention checklist, you will learn some of the best methods to avoid fraud within your small business. Take a look at the list below and make the necessary changes in your company to abide by these fraud prevention methods.

Fraud Prevention Checklist


Having regular communication with your employees, suppliers, and other third parties will avoid fraud that may endanger your company. Try developing a code of conduct and a fraud policy. Moreover, provide fraud prevention courses to your employees to check for any malicious activity for you in several departments.

Review Bank Statements Monthly

Bank statements are one of the best ways to identify any fraud within your company. Checking these statements with your bookkeeper or accountant can help you keep track of different scenarios like unexpected overdrafts, missing or out-of-sequence checks, unknown payees, and altered checks. While reviewing these statements monthly by yourself may be a daunting task, it is necessary to do it. If you do not have a bookkeeper or an accountant in your team, you may consider hiring a virtual bookkeeper.

Stock and Inventory

Although most fraud-related problems are the consequence of money, some others have to do with lost inventory. Always keep track of how much stock you have and where it goes after being purchased. This way, you can avoid misplaced inventory items and, therefore, lose the investment and revenue of that specific item. Having a warehouse manager or software designed to use barcodes will help you with this issue.

Approved Vendor Lists

Suppliers and other third parties that provide services for your company have to get certifications from the government to perform their work. When contacting any of these services, you need to check their background as well as with other clients of that company to make an approved vendors list. Watch out for companies that do not possess a physical address, similar names to other vendors and suppliers you have never heard of before.

Authorized Check Signers

When you have a big company, you are expected to have a few authorized check signers for your company. But, if your company is medium or small, it should only be the owner, the one authorized to sign any checks and other sources of money transference. Remember never to sign blank checks, and if you absolutely need someone to help you in this matter, try to limit the amount of money they can transfer from account to account. This limit will help you better control the cash that goes out from the company.

Software Review

Software is one of the essential points in this fraud prevention checklist. You need your IT department to check on employee and suppliers access rights now and then. Although this review doesn't have to be performed daily or weekly, your employees should already have the necessary accesses and no more. This limited access will ensure everyone working for you is doing what they need to do. In addition, try promoting a password-changing mentality every few months. Employee information will be secure, and most importantly, revenue information will be guarded only for those authorized.

After Hour Access

We've all seen the movies where the villain gets access to any company's secrets by going at night. Of course, this situation should not happen in the real world. Providing strict office hours and checking personally that there is no one else in your office when it is time to close can prevent any fraud that may occur while no one is there. Also, make sure to lock all the premises and install software on all computers so no one can access them after hours.

Fraud Line

Statistics show that most identified fraud cases come from employees. Offering several means of communication to your employees related to fraud, you can optimize your company to avoid these issues. By implementing a fraud phone line, a chat, or an anonymous suggestion box somewhere in the office, you will be able to identify fraud as your employees will act as an enforcer for your company.


One of the most innovative ideas in this fraud prevention checklist is to have insurance. None of us expect fraud to happen within our company, but if it happens, many insurance companies can cover some of the assets you lost due to this problem. Keep in mind that the coverage limits are variable from time to time. Ask your insurance company if they offer this service and how the different rates will work for you and your business.

Be Alert

The last precaution in this fraud prevention checklist is to be alert. Your employees know you, and you know them. Whenever you notice a change in behavior or their regular activities, you should talk to this employee to see what is the matter. If you suspect any malicious activity, contact your bookkeeper or your accountant to check if there is any discerning activity in your books. Remember not to be pre-emptive, do not make any accusations until you have all the evidence.

fraud prevention checklist

Small Business Fraud Prevention Checklist

This checklist was designed for small business owners, but if you have any other business size, the same ideas apply to your company. We all fear fraud as business owners, and the only thing we can do about it is to create a culture that prevents this issue and be prepared if it ever happens.

In addition, make sure that your screening process when hiring an employee is full proof and that you are hiring the right people for the position. If you build trust with your employees, suppliers, and third parties, they will have no reason to do malicious actions towards your company.


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