Fraud isn’t just about the money lost; it can damage reputation, relationships, and growth potential. To minimize losses, small business owners must understand the real costs of fraud and take practical, low-cost steps to reduce risk. When every dollar and relationship matters, understanding these hidden costs and acting early is critical. And, as we’ll learn, there’s also a role for a trusted banking partner that can provide both security-related technology and expert guidance.

While monetary losses are often the easiest to quantify, the impact of fraud extends far beyond the bottom line. When a business experiences fraud, its reputation suffers. In some cases, customers may hesitate to continue doing business with a company that is still recovering from the aftermath of fraud. At the same time, suppliers can lose confidence that the business will survive and pay its debts. Investors may become nervous and seek ways to reduce or terminate their relationship with a struggling company.

When fraud occurs, leadership must shift its focus from running the business to restoring normal operations and fortifying protections. In some cases, that effort can take months or even years to accomplish. When distracted, critical business decisions go unaddressed, further amplifying the impact of the fraud and extending it far beyond the financial losses. All the while, trust erodes, morale drops, and fatigue sets in.

Multi-factor authentication can also reduce fraud risks as it requires the submission of a username, a password, and one or more additional factors to complete a login. Therefore, if an employee inadvertently shares their credentials, it will be more difficult for a would-be fraudster to use them. Business email compromises can be mitigated by enforcing frequent password changes as a best practice and blocking the reuse of login credentials across multiple systems.

Training and testing employees on their knowledge of fraud is also a worthwhile investment. Such training will increase their ability to detect fraud and enhance the “perception of detection,” meaning they will be more aware of the company’s commitment to fraud prevention and less likely to succumb to temptation and engage in financial crime themselves. Encouraging whistleblowing via anonymous channels is also an effective tactic. Whether you encourage employees to call a hotline, submit concerns anonymously via an online form, or send written documents, providing employees with the means to raise concerns is crucial to combating fraud.

With numerous high-performing tools available, asking your institution to review its current fraud-prevention features will undoubtedly reveal tools like check fraud detection that can help reduce the likelihood of your business experiencing losses.

Conducting quarterly reviews of your internal controls, rotating responsibilities to prevent employees from becoming too comfortable in their roles and rewarding vigilance when employees uncover fraud schemes are essential. So, while technology can play an important role, when mixed with the right culture, your business can improve the effectiveness of its countermeasures.

If your business needs enhanced protection against fraud, contact BankUnited today to discover how their team can help you mitigate your risks.