Why business leaders need to take action against financial fraud

The majority of small business owners are failing to take measures to prevent financial fraud, despite instances of it rising, new research has suggested.

According to Financial Fraud Action UK, 69% of business leaders and managers admit to not taking action to combat the issue, leaving both their business and employees at risk.

Nearly half of leaders (49%) believe that fraud is unlikely to happen to them, while a similar number said they have little to no concern about falling victim to scammers.

More than a quarter of firms said they had already been targeted by a financial scam or an attempt at one in the last two years though, which makes the lack of concern quite surprising.

According to the latest figures, senior management and business owners are the most common targets for fraudsters, as 67% have been targeted. Meanwhile 40% of employees in larger companies have also been hit.

Invoice fraud, whereby staff are sent fake invoices for goods and services, and CEO impersonation have been the two main fraud issues faced by firms.

Nearly eight in ten business leaders said they were unaware of the impersonation method, which sees a fraudster impersonate the head of a business and request a payment to a new account.

FFA UK warn that both those in charge of businesses and their employees need to be more vigilant towards potential fraud and some of the tactics that might be used.

Staff training forms an important part of any anti-fraud measures and those that are unaware could put their business or other staff at risk.

Those that are victims of fraud can suffer significant financial losses, which can place great strain on the business.

In severe cases, and where companies are operating on particularly tight margins, such an event could even leave them facing administration or other hardship.

It is likely that a business’ reputation will also be hit, and that can also have lingering consequences when the consumer loses trust.

By Phil Smith

If you would like to have a free no obligation chat with one of our advisers please call us on 020 7186 1144.

View all Business Insights