How To Protect Your Small Business Against White Collar Crime

by Stephanie Wagner on October 24, 2013

  • SumoMe

Small businesses experience theft and fraud issues just like major companies, but many times identifying a culprit can be easier for a small business. There are a few tried and true business practices and policies that can help a company systemically when they want to protect against the possibility of misappropriation of funds and company property.

Common sense and verification can go a long way in maintaining solvency within the company. Minor instances are much easier to manage, but a minor problem can develop into a major problem if the perpetrator thinks they can continue the fraud or theft without anyone noticing what is actually happening. It short, a thief can become brave when they get greedy.

Many crimes fall under the category of white collar crime. These include “embezzelment, forgery, accounting fraud, bank fraud, and computer and internet crimes,” according to

Revenue Action Verification

Always designating specific individuals to handle financial transactions is very important. Having another employee verify financial action can help, but two individuals can cooperate in committing the crime. Instead of keeping each other honest, they keep each other covered. This can be a real problem in both theft and money laundering.

Falsely reporting financial inputs can be as problematic as failing to report an input. Additionally, deceptive payouts can also result in theft or fraud, especially when the employee is essentially paying themselves for services that were never rendered. Verification is important, but it must be honest verification.

Inspecting Financial Records

It is a sound business practice for the owner or manager of a small business to inspect financial records on a regular basis. If a continual monitor can be used, this is always the best practice. However, that is not always possible, especially in a robust business with a large business volume. Always remember that business is ultimately about profits and cash flow, and good managers have good financial oversight practices.

Growing businesses have accurate and vibrant cash flows, even when they experience growing pains, and weak cash flows can result in failure quickly. It is entirely possible that a small business can be robbed significantly by an internal staff member who primarily handles all of the money.
Investigating Potential Contractors and Vendors

It is very important to always make sure you know your business partners. Before entering into any contractual agreement, make sure to conduct thorough research about their previous business success and failures. Criminal records can be crucial for those individuals who are involved in financial transactions.

People are often prosecuted on borderline or flimsy evidence, but any charge is an immediate red flag. Make sure to investigate the case particulars of any charge, even if the charge was dismissed. The actual charge is a public record also and, unless the accused has expunged all records, the indictment or arrest trail is still viewable.
One of the best overall practices is having a professional accounting firm audit the books annually, or even quarterly in some cases.  This can be expensive, but it also makes sense when taxes are paid quarterly. Another smart practice is to have experienced legal representation on retainer. According to, “there are many different types of criminal cases that fall under the umbrella of white collar crime, all of which require effective representation by an experienced white collar crimes attorney.” Making sure the business is financially and legally sound is of utmost importance for the serious small business owner and operator who is trying to build a long-term career.



Stephanie Wagner

Stephanie Wagner

Steph Wagner is a now a journalist who specializes in discussions of legal topics. She gained experience in both the legal and insurance industries through a variety of roles, including working with lawyers in the fields of policy underwriting and personal injury claims.

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