£260 Million of Fraud Unreported by SMEs
In a recent survey of 500 SMEs conducted by Slater and Gordon, the results showed nearly one in five (18 per cent) of business owners and managers whose companies were hit by scams admitted they did not alert authorities after unearthing suspicious or fraudulent activity.
Two thirds (64 per cent) of those SMEs cited fear of causing their business ‘reputational damage’, risk of exposing serious vulnerabilities within their systems and safeguards or assumption it would be expensive to hire specialist assistance, as the main reasons for writing off losses without notifying authorities. Half said the sums defrauded were too small to warrant action.
‘Fraud was committed by employees in a third of cases and by a contractor in one in four. False invoicing (20 per cent), identity fraud (20 per cent), exaggerated expenses claims (22 per cent), fictitious refunds (11 per cent) and unauthorised withdrawals (11 per cent) by employees were the most common violation, the study found.’
The research, conducted by business law specialists Slater and Gordon, which surveyed 500 SME business owners and managers, exposes the previously hidden scale of losses sustained by small businesses.
The hidden loses to business revealed in this research are staggering. Seen in isolation, businesses might not think it worth taking action over some fraudulent activity – in many cases they may think there’s little that can be done. But in fact there are many actions companies can take to recover money after the event.
Small and medium sized enterprises are the backbone of the British economy and the loss of several thousands of pounds to a company can mean the difference between being able to invest and innovate or not. SMEs can find themselves targeted by fraudsters because they lack the resources to put in place the systems and controls frequently required to safeguard against many of these scams.
‘One in six (16 per cent) SMEs revealed they had been victims of the crime in the last year.’
Figures show that Britain’s 5.5 million SMEs suffered more than £1.3 billion worth of losses as a result of fraud, with the average cost of fraud to UK businesses topping £1,540. On average SMEs were targeted by fraudsters three times in the last year, with nearly half (48 per cent) unable to pursue the perpetrator because they were untraceable (75 per cent).
Bosses of small firms said that fraud attempts are more common and far more complex now than they were five years ago. While many fraud attempts were immediately identified and prevented, victims of scams took an average of nearly six weeks (5.8 weeks) to discover suspicious activity, with 1 in five frauds taking more than a month before they were uncovered.
‘More than half of SMEs (54 per cent) said they were unaware of their regulatory duties to prevent fraud and just under half (47 per cent) said they did not have adequate knowledge to prevent fraud.’
If fraud is committed it is vital to detect it as soon as possible. The sooner it is picked up the more opportunity there is to recover funds through injunctions and other legal avenues.
At Askews Legal LLP our criminal law team and regulatory team can advise you on all aspects of criminal fraud against you or your business. Even if you suspect it might be happening, the sooner you contact us the sooner we can start assisting you on the regulatory and criminal aspects.
Askews Legal LLP – Experts in the field of fraud and crime in Coventry and Warwickshire.
Contact Teerath Gill for more details. Click Here or call us on 02476 231000. Confidentiality and discretion assured.
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