The Association of Certified Fraud Examiners (ACFE), a leading provider of anti-fraud training and education for business, says small business owners have every reason to worry: Per-employee losses from fraud in the smallest businesses are 100 times greater than those at their larger counterparts. Yikes! And many small business owners may have a false sense of security. While businesses are reporting a higher number of incidents, most fraud is detected by accident.

These factors can make your business a fraud victim:

1. Inadequate pre-screening of employees. Small businesses do background checks on potential hires less often than big companies. Would-be thieves know this and gravitate toward smaller companies. About seven percent of employees have a history of workplace theft and fraud.
2. Limited internal controls. Small firms that are victimized usually lack the manpower to implement effective controls. Internal controls of some type are critical for a small business.
3. Too much trust. Sadly, the very thing that makes a small business a pleasant place to work also enables thieves within it to succeed.

Tips & Tactics
Helpful advice for making the most of this Guide

• The key to fraud prevention is dividing responsibilities among employees. To prevent and detect fraud, rotate employee assignments. Team different employees together or with you.
• In the cash realm, skimming involves a crooked worker stealing money from the business before it is received and recorded.
• The most harmful schemes usually involve fraudulent payments from your business bank account. For example, an employee might submit a false invoice, which your business unknowingly pays, to the benefit of the thief.
• In the non-cash area, crooked employees usually opt to pilfer items they can put to personal use, such as clothing, jewelry, groceries, electronics, office equipment and supplies.
• If you provide credit to customers, beware of a type of fraud called the "bust out." Unscrupulous customers might buy large amounts of merchandise quickly, running up big bills they never intend to pay. Some start by ordering small amounts and paying on time to establish good credit. Once established, they go for the bust-out.
• Take physical inventory regularly and check daily receipts against lists of items sold. Secure inventory and supplies.
• Hire a CPA to examine your books.