Browse All Categories
By Heritage Bank on February 01, 2023
3 minute read

Preventing Commercial Fraud in 2023

6 Signs of Commercial Fraud [and How to Avoid It in 2023]

Though new technologies make our lives easier, they also leave us vulnerable to fraud and online scams. In 2023, we encourage you to put business fraud protection at the top of your company's to-do list.


Wondering where to start? Heritage Bank can help! We provide individuals and business leaders with secure online financial products and services to help them monitor banking activity in real-time, report abnormal activities and safeguard their accounts from anywhere.


Types of Fraud in Business & How to Prevent It

Please read this guide for tips on how to spot red flags early and prevent future issues from affecting the future of your business. You'll also discover how business banking with Heritage Bank can help you stay in control of your company's financial activities.


Unexplained Bank Account Activity

Unexplained bank account activity is often the first warning sign of commercial fraud. Businesses should monitor their accounts regularly for suspicious transactions, such as large cash withdrawals or purchases that don't match business activities. 


If your business does experience unexplained bank account activity, contact your banking institution and alert them to the problem immediately.


With Heritage Bank, you can monitor your business account from anywhere and report suspicious activities from your smartphone. You can also create custom alerts to notify you of transactions, recent withdrawals, incoming deposits, and more! 


Positive Pay is also a popular service used to combat fraud. It is an automated cash-management service that matches checks issued by companies with those it presents for payment. Checks considered suspicious are flagged before deposit or withdrawal, enabling a business to catch fraud upfront and alert them to criminals using fake checks to withdraw funds from corporate accounts or internal fraud. 


When Things Don’t Add Up

Although it’s always best to catch unusual account activity in real time or the same day, a careful review of your monthly statements is also important. Examples of what to look for include: 

  • Discrepancies in billing for materials

  • Changes to inventory numbers

  • Sudden additional expenses

Sometimes there are operational explanations for these occurrences, but it’s a good policy to require employees to provide explanations or the accounting department to keep notes about unusual expenses. If something doesn’t look right, investigate it promptly. Unfortunately, the answer is sometimes fraud. 


For example, if your company assigns business credit cards to employees, monitor card activity every month. Employees might be tempted to swipe their company cards for something unrelated to work. They may also continue the practice if they are successful in getting a false expense report approved. 


Heritage Bank offers small business credit cards and corporate business cards that allow you to manage multiple employee cards on your account with customized spending limits. You can also adjust card limits and set up alerts and notifications to keep you in-the-know and in control. 


Poor Record Keeping Practices

Poor record-keeping practices—such as incomplete records or lax internal controls—can make it difficult for business owners to spot potential fraud, increasing the risk of financial damages. 


In addition, poor record-keeping can lead to inconsistencies in reporting, which could lead an auditor or other inspections to uncover evidence of fraud that may have otherwise gone unnoticed. 


Business owners should ensure their bookkeeping, accounting and expense reporting are completed professionally. Nothing combats commercial fraud more effectively than processes and systems created to promote accuracy and transparency.


At Heritage Bank, our digital business banking products allow you to instantly upload any credit card transactions to your QuickBooks® account—via our Direct Connect feature. 


Late or Inaccurate Reporting of Completed Work

Business owners should always be aware of the timeline and accuracy of completed work. Lags in invoicing for completed projects, invoices that do not break out charges between labor and hard costs, higher than normal charges for materials and multiple invoices for the same project could all signal fraud on behalf of a vendor or an employee. 


Irregular/Inconsistent Payroll Hours/Rates

Some employees may attempt to collect excessive compensation. Irregular payroll hours or varying rates for the same employees can signal payroll fraud. Make sure you are clear about hourly rates and overtime rates, as well as when overtime applies. Explain in writing and in person. 


Creating clear guidelines for requesting and requesting overtime is important. Best practices include requiring supervisors to clear over time requests from their direct reports with their boss. Also, many businesses require hourly employees to clock in and out during the workday to provide documentation of hours worked and to automate payroll. Traditional stamp machines and cards have given way to systems accessed through digital devices owned by the company.


Employees Who Work Round the Clock

Have employees who never take a day off? They might be workaholics. They might be dedicated to your mission. Or they might be committing fraud. 


Auditors and federal law enforcement officials encourage business leaders to take a closer look at people who never use up their vacation time or take time away from the office. They might be great employees, or they might be afraid that time away might allow someone to detect their deception.


Want Better Business Fraud Protection in 2023?

For decades, we've served business leaders and corporate enterprises throughout the Cincinnati and Northern Kentucky region. And each year, we continue to update and monitor our digital banking products, so they provide the best-in-class service and security possible.


For more details on our credit card options and business banking solutions, please visit our Business Credit Card page to compare offers and apply online. To learn more about how we're working towards better business fraud protection in 2023 and beyond, we encourage you to visit a community bank location near you or contact our Treasury Management Department to learn how business banking services can deter fraud and potentially expensive errors. 

Published by Heritage Bank February 1, 2023