Fraud in small business: The cost
If you’ve been living under a rock for the last few years, you might not have heard that fraud is big business. Companies are most at risk of fraud from their employees, since they have access to information and assets.
On average, companies lose 5 percent of their revenues to internal fraud. This means that a company with sales of $50 million is likely losing $2.5 million each year to employees with sticky fingers. In this age of amazing shrinking profit margins, 5 percent could mean the difference between being in the red or in the black.
You might be thinking that your company has never had that much stolen in one year. Correction: You don’t know if you’ve had that much stolen by employees. Companies can’t quantify exactly how much has been stolen from them, because they simply are not aware of all the frauds committed.
The average is 5 percent, and it’s based upon a consideration of the known and unknown frauds in companies. Don’t get caught in the trap of thinking that your company is much better than average. As managers of companies, you may like to believe that you’re doing better. But some companies are doing better, and some are doing worse. Assume that your company is losing 5 percent, and try to improve on that.
