How to Spot and Stop Fraud in Your Business Finances

When you think about fraud, your mind might jump to dramatic headlines or Netflix documentaries. But in reality, fraud often happens in the quiet corners of everyday business life—missing receipts, duplicate payments, or mysterious vendor charges. As a small business bookkeeper (and honorary watchdog of dollars and cents), I’ve seen how easily financial fraud can sneak in—and how important it is to stay one step ahead.

Let me walk you through how to spot and stop fraud in your business finances, using a practical (and slightly witty) approach.

1. Trust, but Verify—Every Time

Sure, you love your team, and maybe even your cousin who “helps with the books,” but friendly faces aren’t a substitute for proper controls. Fraud doesn’t always come from strangers—it can come from familiarity and too much trust without verification.

What to do:

• Always review your financial reports monthly—your Profit & Loss, Balance Sheet, and especially your Bank and Credit Card Reconciliations.

• Separate duties when possible. If one person writes checks, another should reconcile the bank account.

• Set up approval workflows for payments, payroll, and expenses—tools like QuickBooks Online can help automate this.

  
  

2. The Mystery of the Disappearing Receipts

Receipts are the breadcrumbs of your financial trail. When they go missing, you may be dealing with more than a cluttered desk. Expense fraud is one of the most common small business issues—think inflated mileage, duplicate reimbursements, or "business lunches" that look suspiciously like happy hours.

What to do:

• Use digital tools like Expensify, Dext, or QuickBooks Receipt Capture to collect and match receipts in real-time.

• Set clear policies: what's reimbursable, what’s not, and what documentation is required.

• Run random audits. It’s not about playing detective—it's about reinforcing accountability.

3. Vendor Voodoo: Watch for Fakes and Duplicates

Fake vendors, ghost employees, or duplicate payments to the same vendor under slightly different names—these tricks are classics in the fraudster’s playbook.

What to do:

• Regularly review your vendor list and payroll reports. Look for vendors with similar names, matching addresses, or suspicious activity.

• Require W-9s and backup documentation for every new vendor.

• In QuickBooks or other software, turn on alerts for duplicate transactions.

4. Unusual Behavior? Don’t Ignore the Red Flags

Sometimes, it’s not about the numbers. Changes in behavior can be a clue—like an employee becoming unusually secretive about reports or suddenly working odd hours with exclusive access to the books.

What to do:

• Keep open communication with your team. Create a culture where questions are welcome, not feared.

• Consider an outside bookkeeper or accountant to review your records regularly. (Ahem—like me!)

5. Use Technology as Your Ally

Modern bookkeeping software can be your first line of defense. Automated alerts, bank feed rules, and audit logs can flag suspicious activity before it grows legs.

What to do:

• Enable bank and credit card feeds to catch unauthorized charges quickly.

• Use multi-factor authentication on all financial platforms.

• Check your audit trail in QuickBooks or similar software to track who made which changes and when.

Bonus Tip: Don’t Go It Alone

Even the most savvy business owner can’t do everything—and shouldn’t have to. A professional bookkeeper can be your eyes and ears in the background, quietly making sure everything adds up and calling out fraud before it becomes a financial headache.

And if you're not sure what you're looking at, or something just doesn’t feel right, don’t shrug it off. Reach out. A short conversation with a trusted advisor could save you thousands.

Final Word (from a Bookkeeper Who’s Seen It All)

Fraud prevention isn’t about paranoia—it’s about protection. Your time, your energy, and your business are worth guarding. With smart systems, a few good habits, and a bit of financial savvy, you can create a business environment where honesty thrives—and fraud has no place to hide.

If you'd like help reviewing your books or setting up better fraud prevention systems, I'm just a (friendly, non-judgmental) email away.

Stay vigilant—and may your numbers always reconcile!