Rise in Fraud Threatens Small Business says KPMG
Fraud against UK businesses is on the rise ― that is the warning from KPMG after its research highlighted that the cost of fraud against commercial organisations exceeded £64 million in the first six months of this year.
The report found that the cost of fraudulent activity against public and private sector organisations increased by a third in the first six months of 2011 on the same period in 2010. KPMG added that while big businesses bore the brunt of the cost of fraud against commercial organisations, it could also cripple small firms.
“Although it’s just as prevalent in larger organisations, small and medium-sized businesses are more likely to suffer dire consequences as a result.”
said KPMG UK forensic partner Hitesh Patel.
“For small companies, fraud can often lead to significant cashflow problems resulting in redundancies — and at worst a fight for survival.”
Patel added that the increase in fraud is largely due to technological advances, with criminals staying ahead of those employed to protect against it.
The head of watchdog Action Fraud, Jamey Johnson, said that the figures could be even worse than the report suggested as a lot of fraud goes unreported.
“Staff aren’t always aware it’s happening, such as getting invoiced twice for the same thing and invoices which are much bigger than they should be. These sort of issues can be resolved by having robust processes in place, but often firms don’t have the processes and they don’t realise there is a problem until its too late and the money has gone out.”
Rosie Heptonstall, founder of small business 2nd Head, said her employees were aware to look out for scams, but that fraud remained a problem.
“Some free trials can cause real issues. We once signed up a for a 30-day free trial with a tender company, but hidden in the small print it said that at the end of this period you would be automatically signed up. So we registered for the free trial and ended up being charged £500 ― a lot for a small firm.”
“Businesses can sometimes be more trusting than they should be, but it’s worth double checking if you sign up to a free trial. I now ask for an email stating that we won’t be charged at the end of the trial and that we can opt out. I also put a note in my calendar to call them at the end of the free trial.”