How to Protect Your Business Against Fraud?

ACCOUNTS PAYABLE FRAUD: IS YOUR BUSINESS PROTECTED?

Chartered Accountant in Delhi

Think about all the money that flows out of a business. Payments go to vendors, suppliers, utilities, and rent. And every rupees that a company spends goes through Accounts Payable (AP). For this reason, AP is vulnerable to fraud from inside and outside of the business.

What is accounts payable fraud?

AP fraud involves a wide range of activities. Check tampering cons, billing schemes, and expense reimbursement scams are all examples of AP fraud. Some definitions:

· Check tampering scheme 

A fraudulent disbursement scheme in which a person steals his or her employer’s funds by intercepting, forging, or altering a check or electronic payment drawn on one of the organization’s bank accounts.

· Billing scheme 

A fraudulent disbursement scheme in which a person causes his or her employer to issue a payment by submitting invoices for fictitious goods or services, inflated invoices, or invoices for personal purchases.

· Expense reimbursement scheme

A fraudulent disbursement scheme in which an employee makes a claim for reimbursement of fictitious or inflated business expenses.


Red Flags

It’s not always easy to see the signs of AP fraud unless you know where to look. Good accountants have developed effective ways to spot accounts payable fraud. Great accountants can also reduce the chances of it happening. Here are a few ways to detect accounts payable fraud in any business:

1. Consider the human element.

2. Verify your vendors.

3. Test transactions.

4. Monitor financial ratios.

5. Review write-offs.

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Why you should plan budget for your company?

Accounting in India

A budget helps you build out your long-term goals and work towards them. There are various reasons why a business should prepare a budget…..

1.     You need to know how much cash you need to support the growth or lack of your business & company.

2.     You need to budget your costs so that someone in the business can keep them under control.

3.      If you don’t aim for a sales or profit figure, it is highly likely, you or your team don’t have a clear idea of where the business is going.

4.     Doing a sales budget gives you an idea of how realistic your sales growth is. If a sales target has been produced by a salesperson – watch out, it will often be wildly positive. Sense checking this will you more of a reality checks.

5.     It is likely in the year of a growing business that you will have to recruit. Your budget should tell you the cost of this and also the cost of not recruiting quickly enough.

6.     Comparing your budget to your actual performance will give you a better idea of your profit margins.

7.     Yes, your budget will not be 100% accurate. How can it be? However, it will be more accurate and you will be in a better position to predict your future if you spend the time planning your finances.

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