6 Ways to Help Your Small Business Prevent Fraud and Costly Mistakes

Updated February 26, 2026 The rise in cybercrime and remote work environments have created new risks and obstacles for many small businesses. Phishing emails, password attacks and employees working from home offices or at remote locations provide numerous opportunities for sensitive information to be compromised.

Inc.com reported in their February 2026 technology newsletter, “research by Public Private Strategies Institute found that 72% of small businesses were hit by fraud, scams, or ransomware last year”. According to the article, “71 percent of respondents said they believe that the spread of artificial intelligence tools will cause fraud and ransomware attached to become more common”.

While an increase in fraud is being reported, there is no need to panic. If you haven’t reviewed and updated your existing systems in response to scammers and changing work conditions, it is not too late to create a plan. The following list provides six ways to help you prevent fraud and reduce risk in your business.

1. Protect Your Small Business Passwords

Use multifactor authentication when possible and limit the number of people who have access to passwords of business accounts such as:

• Email business accounts
• Bank/financial accounts
• Bookkeeping/invoice software
• Websites and social media accounts

2. Create internal systems to avoid unauthorized or duplicate payments

• Use a unique identifier when placing orders with vendors
• Set up processes to approve payments
• Understand your accounting software and use built-in features to help detect duplicate invoices or payments

3. Know your vendors

• Create an internal process to approve and verify new and existing vendors
• Emails from vendors demanding payment should be independently verified
• Confirm products and services were received before authorizing payment

4. Pay attention to payroll

• Outsourced payroll needs verified and approved
• Check employee names and rates on a regular basis
• Expense reimbursements should be approved to make certain business reimbursement policies are being followed

5. Check the checks

• Perform monthly bank reconciliation by verifying the cancelled check with the bank statement and accounting software
• Note when check numbers are out of order or missing and research
• Verify authorized signatures are accurate

6. Segregate accounting duties

• Review bank statements before turning over for reconciliation
• Review accounts payable and accounts receivable reports each period for accuracy

Challenges for Small Business Owners

Small business owners do not always have the luxury of having more than one employee available to segregate accounting duties. Often, one person is responsible for all aspects of the financial record keeping for the company. Implementing internal systems to mitigate risk is possible no matter what size your business may be.  

We understand the specific needs of small business owners. Loss of income due to error or fraud can make it difficult to meet your goals and the financial needs of your business.

Establishing the right internal controls specifically for your business, including the steps listed, can help you keep your business on a secure path to reduce the risk of loss and ensure the accuracy of your financial information.

As always, should you have questions on this or other matters affecting you or your business, please call 215.675.8364 or email us to speak with a member of our team today.

Christine Nelson is an accounting paraprofessional in our Center City Philadelphia office. She is a Certified QuickBooks Level 2 ProAdvisor and has over 20 years of experience helping businesses set up and maintain bookkeeping systems including QuickBooks, MAS 90, Great Plains, Creative Solutions, Peachtree and NetSuite. She is also available to manage, train and help transition companies to a new bookkeeping system.

DISCLAIMER: All communications by Wouch, Maloney & Co., LLP intend to provide general information, as of the date of the communication, and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. Please be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.