Running a business is not an easy task as it requires equal attention to all the sectors that run the company. In the business world, there are various issues or problems that can arise from within the company too. One such example is payroll fraud in which an employee cheats with the payroll system to get more amount of money than they are entitled to.
Payroll fraud can be done in different ways, but the most common ways are timesheet fraud and ghost employees. Basically, in timesheet fraud, the employees change the working hours either by themselves or through the payroll clerk. Another way of the payroll fraud that is very common is the ghost employees in which an employee is present in the company but doesn’t work there. This way the company loses their money in the form of salary.
Payroll fraud can be really frustrating because it is mostly performed by the company’s own employees. However, there are certain ways by which it can be eliminated. Now let us discuss some of those ways that can free your organization from such problems:
Perform background checkup
One of the first and major things that you will have to do is conduct a full background checkup of every person who is accountable for the company payroll system and has the access to the company bank accounts. Pre-employment screening can also be very helpful to ensure that the person hired will be honest, and qualified enough to fit in your company. Make sure that you include all necessary things in background checkups such as federal and state criminal checks, an alias check, a credit check, motor vehicle report as well as education and employment verification.
Limit the access to the payroll system
Another great way to prevent your company from payroll fraud is to limit the access to the payroll system to those who really need it to do their jobs and who are trustworthy. Make sure to create a policy before sharing the login information for all the employees.
Review the payroll report regularly
The company should regularly review their payroll reports to avoid any kind of fraud. This task can be assigned to the business manager or can be done by the business owner himself. You can’t take the risk of giving this task to someone whom you don’t trust.
Use an effective way of pay service
According to the study, around 71% of organizations experienced attempted or actual payment fraud in 2010, with checks being mostly targeted. Companies can avoid this type of fraud by using an automated fraud detection tool like positive pay service. The service matches all the data present on the check such as account number, check number, amount and many more useful details. And if any of these details do not match, then the check becomes an “exception item” and is informed to the responsible company to review the check.
Use direct deposit and pay cards
If possible, ask your employees to receive their payment through direct post or pay cards rather than by checks. This is a more convenient way of payment. It also eliminates the chance of payroll fraud as there is no chance of stealing and manipulation.
All the points mentioned above can be easily implemented by any organization, regardless of their size and venture. These steps do not require any additional cost but require a little investment in time. In order to have an efficient and healthy environment in your company, as an employer, it is your sole responsibility to spot every problem and deal with them smartly.