Whether you’re running a large corporation or a startup enterprise, all businesses are susceptible to fraud attacks, especially without the help of reliable bookkeeping services. By recognising clear signs of fraud, implementing preventative policies and creating a flawless accounting system, bookkeeping can play a critical role in helping businesses avoid fraudulent activity and maintain their financial health.
At Surebooks, we understand the dangers of fraud attacks and the negative impact they can have on your company. In this brief read, we’ll be outlining the various ways that bookkeeping services can help to protect your business from fraud and how Surebooks can keep your finances in check.
What Is Fraud?
Understanding what fraud is and how it happens is essential to preventing it from happening. Regardless of whether you run your own business or not, you’ve probably heard of fraud before as it is an illegal activity prevalent in multiple industries and online spaces. Fraud is described as a deliberate, deceptive act with the intention of achieving a gain (it does not necessarily have to be a financial gain for it to be classified as fraud).
Often used as an umbrella term for various types of dishonest financial attacks, activities such as bulk phishing, identity theft and online shopping scams would all be classified as fraud.
When speaking in accounting terms, fraud is referred to as the false and illegal alteration of a business’s financial documents. The main reason as to why fraud occurs in so many businesses is for achieving personal or corporate gain and can be committed by both the managers and employees of a company.
There are several examples of fraud that can happen in the workplace, namely:
Overstating Assets
A common way that financial fraud is committed is through the overstating of assets. When the assets of a company, such as their inventory, property value or investments, are inflated, this is considered fraud. Similarly, writing up fake assets would also count as fraudulent activity.
The main reason why company owners and employees commit this crime is to draw in potential investors by making the business seem more valuable than it is. When the true price of a business’s assets is disclosed, it causes investors to lose money. People outsourced from bookkeeping services are great at detecting fraud and can help you to avoid this kind of suspicious activity.
Understating Liabilities
If your business has outstanding debt, it needs to be reflected in your financial statements. All the money coming in and out of the business needs to be evident in the financial documentation of the company. Forging debt payments, understating or hiding your liabilities is regarded as financial fraud. When business employees or owners understate their debt, it makes the company seem more financially secure when its actual stability may be less than apparent.
While this may temporarily conceal a company’s real financial health, it often results in further financial issues and can overvalue stock prices. Without the help of outsourced bookkeeping services, this type of fraudulent activity can be easily committed without detection.
Overstating Revenue
One of the most common types of financial fraud is the recording of fake revenues. This is typically done with the intention of making the company seem like a more lucrative investment for potential investors. From inflating the cost of sales to creating fictitious invoices, there are several ways a business can overstate its revenue, which may be why this type of fraud happens so frequently.
While detecting fake revenues may be more difficult to detect than other financial documents, outsourced professionals from reputable bookkeeping services are trained to look out for signs of fraud.
The Role Of Bookkeeping In Preventing Fraud
No matter the size of your company, fraud can happen to any business, which is why it is crucial to safeguard your financial health. If you don’t have a trained professional managing the ins and outs of your business’s finances, the more susceptible you are to experience undetected fraudulent activity. While it may be tempting to manage your own finances and save on costs, running your own business requires a great deal of time and effort.
Outsourcing bookkeeping services from accredited companies like Surebooks is a great way to keep your finances meticulously organised and protected while still having the capacity to run your business. Bookkeepers provide a range of services integral to managing your business’s finances, such as preparing for tax return and managing accounts payable and receivable.
Some of the most vital bookkeeping services that can help to keep your company’s finances secure include:
Reporting Timeously & Accurately
Arguably, the most crucial measure you can put in place to protect your business from potential fraud is creating concise, exact financial reports. Bookkeeping does more than just handle your books – they provide flawless financial reporting delivered within your given deadline.
Those that offer bookkeeping services are trained to meticulously record and organise your financial documents for you, meaning that all your financial documents will be accurately reflected every time. Precision is crucial to the work of bookkeepers, so you can trust that the financial health of your company is recorded to the T.
Similarly, Surebooks accounting services strive to be transparent, no matter what your business’ financial stability is. With the help of bookkeeping services, never again will you have to worry about the potential overstating of assets or understating of liabilities under your nose. No matter what, your reports will always be clear and comprehensive, allowing you to view your business’s finances honestly.
Identifying Irregularities In Financial Records
Your company’s finances need to be reviewed regularly and accurately to identify anomalies that may indicate fraudulent activity. Attention to detail is key to identifying these inconsistencies, which is why bookkeeping services can be especially helpful.
It is essential that the accounting services you decide to use are accredited, have experience and be professionally trained in accounting. Bookkeepers are experts at what they do, meaning that a minor inconsistency you may easily miss in your financial reports will be immediately detected by someone that provides bookkeeping services. Every single one of your business’s financial documents will be thoroughly examined to identify potential signs of fraud, making you less susceptible to fraud attacks.
Additionally, bookkeepers are particularly adept at recognising patterns in your business’s financial records. When a set of figures or reports deviate from your company’s typical way of recording financial documents, professionals outsourced from bookkeeping services will pick up on these sudden changes in business operations. By alerting you to these irregularities, you’ll be able to find the root of the issue as well as prevent potential fraud.
Establishing Internal Controls & Procedures
While recording and managing your financial records is necessary for safeguarding your business from fraud, it is not the only part involved in keeping your finances protected. Bookkeeping services are great at implementing strict internal controls that are targeted at preventing fraudulent activity. The better these systems are controlled, the less likely you are to experience fraud.
Good accounting practices also establish and maintain specific checks to deter fraud, such as anti-fraud training, regular audits, segregated duties and limited financial access. Segregating company duties, for example, prevents employees from having more control than they should over processes in the business. By evenly distributing responsibilities among workers, misconduct is less likely to happen.
Similarly, limiting the access of who can view and edit the business’s financial documents is essential for preventing fraud. When you outsource your bookkeeping to Surebooks you ensure that only a specific set of individuals can view the company’s sensitive information to further safeguard the business’s finances.
Working Together With Legal Teams & Auditors
When investigations and audits are performed at a business, it is the work of bookkeepers to prepare the relevant information and records at these interviews. Your business will have regular checks and performance reviews, which is why it’s best to have a professional bookkeeper that is clued up on your business’s finances to provide a transparent, accurate overview.
Bookkeepers work closely with auditors and legal professionals, meaning they have a thorough understanding of the legal standards your business needs to follow to remain financially stable. To avoid fraud, your company needs to follow specific financial rules, which is why the collaboration of auditors, legal teams and bookkeepers is especially useful for detecting irregularities. By ensuring that you are complying with legal standards, your business is already safeguarded against internal fraud attacks.
Why Outsourcing Bookkeeping Is A Good Idea
When it comes to managing your company’s finances and maintaining financial stability, bookkeeping is the way to go. From thoroughly organising your books to deterring potential fraud, accountants provide many valuable services for all businesses.
Outsourced professionals from Surebooks work tirelessly to benefit the growth of businesses, helping owners to progress their companies to their full potential. Here are just a few reasons as to why you should consider hiring bookkeeping services for your business:
Pay Taxes Easily & On Time
The dreaded tax season is a chaotic time for many business owners, especially for those without the help of a professional bookkeeper. From the heaps of paperwork to the strict deadlines, dealing with taxes can be incredibly stressful when you’re managing a company on your own.
Relying on professional accountants like those at Surebooks is a great way to minimise stress and be prepared for filing your taxes. With bookkeeping, your financial documents will be thoroughly organised and up to date, providing you with the tools you need to pay your taxes easily and on time.
Run Your Business More Effectively
Being a business owner and personal accountant all rolled into one isn’t all it’s cracked up to be. Keeping up with your accounts is a tedious and time-consuming task, especially when you have a heap of other responsibilities to attend to.
Running your company effectively means dedicating time and energy into your job, which is why it’s more beneficial to outsource accounting services to manage your books for you. Without the stress of handling paperwork and organising your financial records, you can stay productive and allocate time to growing your business even further.
Get In Touch With Surebooks Today
Now that we’ve unpacked the ins and outs of what financial fraud is and how bookkeeping services can help to safeguard your finances, why not reach out to a reliable company like Surebooks?
If you care about fostering the financial growth of your business but are worried about fraud attacks, consider getting in contact with one of our experienced professionals via our online website.