How to prevent employee fraud: Small-business advice

Dear Karen: How can I minimize the chances of employee fraud at my company?

Answer: Fraud costs organizations about 5% of their revenue annually, according to the Assn. of Certified Fraud Examiners. In 2009, fraud accounted for more than $2.9 trillion globally.

Maintaining current, accurate financial records is the best way to avoid fraud, said Dana Basney, certified fraud examiner at accounting firm CBIZ MHM. Get third-party background checks on new employees and personally review financial statements and canceled checks before turning them over to your bookkeeper.

It’s also a good idea to segregate your employees’ duties, so no one person has access to your company’s cash deposits and accounts receivables records.

On the edge of bankruptcy

Dear Karen: I’m not sure I can keep my business out of bankruptcy this year. Any thoughts?

Answer: Anticipate problems by creating a cash flow forecast, which can spot difficulties well in advance so you can deal with them. A survey of financial experts done by Chase Card Services suggests negotiating a staggered payment schedule with clients and vendors to improve your company’s cash flow.

On the revenue side, use the “80/20 Rule.” It’s likely that 80% of your profit comes from 20% of your efforts. Figure out which services, clients or products are the most profitable for your business and focus on them, dropping activities that drain your resources without contributing much to your bottom line.

Small-business questions? E-mail Karen at smallbiz@latimes.com