Small businesses face significant risks from theft and fraud. According to the Association of Certified Fraud Examiners, 44% of small businesses have experienced fraud, 54% never recover their losses, and 32% of losses are tied to poor internal controls. The good news: a few practical steps can meaningfully reduce your risk.
1. Segregate duties
Accounts receivable: The associate who receives cash should not also deposit it and record it in your accounting system. Accounts payable: Maintain an approved vendor list. Ensure the associate who approves payments is not the same person writing checks and reconciling the bank account.
2. Make timely deposits
Deposit cash and checks daily to decrease the chance of theft. Reconcile merchant services deposits (card/online payments) daily.
3. Reconcile bank accounts
All bank accounts should be reconciled at least monthly. Ideally, have someone who is not involved in day-to-day accounting receive unopened statements or monitor online activity daily.
4. Control access to check stock, accounting systems and cash
Lock up unused check stock. Separate access to systems where checks or payments can be generated and require strong passwords and multi-factor authentication. Secure cash and checks awaiting deposit in a safe.
5. Utilize technology and protect sensitive data
Use system-based approvals and user entitlements for purchases and payments (dual approvals, limits, alerts). Protect sensitive information about your company, employees, and customers with access controls, encryption where available and regular employee training.
Charly Dena currently serves as an assistant vice president in retail market support for First Horizon Bank, where she leads initiatives that improve efficiency and elevate the overall client experience. With more than 15 years in retail banking, she is known for her expertise in strengthening operations, supporting market performance and creating customer-focused solutions.