There’s an inbox full of good news to take in this morning.
First, we didn’t die from the 53-year-old Russian spacecraft that was hurtling uncontrolled towards Earth this weekend. Kosmos 482 finally crashed into the Indian Ocean after failing to land on Venus in 1972. So there’s that.
And on the tariff front, the US and China have agreed to a temporary decrease in reciprocal tariffs, while talks continue. The US is lowering its tariffs on China from 145 percent down to 30 percent, as China lowers its tariffs on the US from 125 percent down to 10 percent.
So take a 90-day sigh of relief if you’ve been sweating the effects of that situation on your business. Hopefully, that 90 days will give you the extra time you might need to research and finalize your adjustment plans. We’ll keep you updated, as always.
In a headline you might not have seen, the partner of a business founder in jail for defrauding investors is trying to raise money for a startup of his own. The reason I bring this particular story up is because business fraud is the nightmare that every business owner hopes never happens to them in real life.
But unfortunately, it does, so I want to venture into business fraud prevention tactics today in hopes of helping you think through practical checkpoints in your Jersey Shore business. Even if you think it could never happen to you, let’s talk about making sure it doesn’t.
“You don’t build a business, you build people, then people build the business.” – Zig Ziglar
In a 2024 study, the median fraud scheme took 12 months to detect. Think about what 12 months of unseen embezzlement or asset misappropriation could cost your business – not just in dollars, but in trust and reputation too.
That 12 months is the reason your business needs a system in place to stop fraud before it happens. Preventing fraud is far cheaper and less painful than trying to recover from it.
Thankfully, you’re not powerless here. There are proven ways to reduce the risk of fraud before it starts bleeding you dry. And while no system is perfect, strong prevention efforts can shrink both the likelihood of fraud and the financial impact if something does happen. I’ll walk you through my top strategies toward that end today.
But first, you need to know what you’re up against. Business fraud generally falls into three buckets:
Bucket 1: Asset misappropriation. This is when an employee steals or exploits company resources. Classic examples: skimming cash before it’s recorded, padding expense reports, issuing fake vendor payments, manipulating payroll, or walking away with equipment or inventory.
Bucket 2: Corruption. Bribery, secret commissions, bid rigging, or undisclosed conflicts of interest (for example, steering contracts to a friend’s business).
Bucket 3: Financial statement fraud. This more insidious fraud is when numbers are intentionally manipulated – fictitious revenue, concealed liabilities, inflated asset values – to paint a false financial picture.
Each of these categories demands its own defensive playbook, but the underlying principle is the same: internal controls, accountability, and vigilance.
Let’s explore what those look like in action…
Pay attention to your employees’ behavior – fraudsters usually exhibit certain behavioral red flags before or while committing fraud.
You might have a loyal, hardworking employee whose actions start feeling “off.” They refuse to take vacation (because no one else can “cover” their work). They start living beyond their means, or they become overly defensive when asked routine questions about their responsibilities.
No, these signs don’t automatically mean fraud is happening. But they should prompt closer attention. Don’t hover over your employees as a micromanager, but as a leader who knows what’s “normal” and what isn’t.
And on a practical level, it’s helpful to enforce mandatory vacation policies, job rotation schedules, and regular reviews of work handled by long-tenured employees (especially for roles involving cash handling, bookkeeping, or purchasing).
Your systems should be designed so that no single person has unchecked control. Strong internal fraud controls in your business look like:
Leverage technology here. Many accounting systems and banking platforms now offer built-in fraud prevention features. These include positive pay (which matches issued checks to checks presented for payment), automated approval workflows, and real-time alerts for suspicious transactions, among others.
And don’t forget to reevaluate your controls at least annually (ideally with the help of a third-party accountant or auditor who can test for gaps you might be too close to see).
Culture matters as much as controls in fraud prevention. As the leader of your business, it’s up to you to create the culture: One where employees 1) feel safe raising concerns, 2) believe ethical behavior is expected, and 3) see accountability in action.
Focus on three core steps to set up this type of culture:
#1: Implement a formal fraud policy. Put it in writing. Define what constitutes fraud (theft, falsifying records, conflicts of interest, bribery, etc.), outline how it will be handled, and make sure everyone knows the consequences. And revisit it during onboarding, annual training, team meetings, or whenever processes change, so it stays top of mind.
#2: Train your staff on red flags and reporting procedures. Many employees don’t know what fraud looks like or how to report it. So, give them practical examples – like unexplained changes in coworker behavior, unusual vendor relationships, or suspicious financial activity – and explain who to go to if they have concerns.
A lot of times, employees don’t report concerns out of fear of retaliation or damaging workplace relationships. So, set up a third-party hotline or anonymous reporting tool.
#3: Make it clear: everyone shares responsibility. Don’t assume, “My team would never do that.” Even good, loyal employees can make poor decisions under pressure (especially if they’re struggling financially or they feel resentful). But when ethical expectations are clearly communicated, people are less likely to rationalize bad choices.
The businesses that stay ahead of fraud are the ones that conduct internal audits on a regular, recurring basis (not just at tax time, or when you suspect something’s wrong).
You should review the effectiveness of key controls, reconcile accounts, test compliance with policies, and evaluate whether your processes are still fit for the size and complexity of your operations.
I recommend spot audits as part of this routine (and rotate who conducts said audits), especially in high-risk areas like petty cash, credit card transactions, payroll entries, and vendor payments. Why? They send a clear signal to fraudsters – you’re paying attention. When they know there’s ongoing oversight, it’s a powerful deterrent.
Yes, it can be uncomfortable to take protective measures like these with your trusted team members. But failing to do so is far more costly. And the best fraud prevention plan? One that’s tailored to your operations, your team, and your risks.
If you want help with the internal control systems in your Monmouth Beach organization, especially in your bookkeeping or accounting, book a time on my calendar to discuss that: calendly.com/shorefinancialplanning/the-first-step
Protecting your business’s prosperity,
Joseph Vecchio