A new study has found that SME’s are failing to report more than £260m of fraud every year. A report carried out by law firm Slater and Gordon discovered that a huge 18% of SME’s that fell victim to scams, did not alert the authorities.
The reasons for not reporting the fraudulent activity are varied with 64% of the silent companies saying that the SME’s didn’t report the fraud because they were fearful that it would cause irreparable damage to their reputation. They were also reluctant to hire a specialist to assist with the recovery of the money as there was an assumption that this would be expensive. Half of SME’s involved said that the total amount of money that was defrauded was too little to warrant action.
Worryingly, it seems that knowledge is lacking when it comes to protecting our businesses against fraud, with 57% of SME bosses not carrying out fraud audits and internal stress tests furthermore 54% said that they were unaware of the regulatory duties required to prevent fraud. It seems that this may be where SME’s need to invest over the coming years to avoid making further losses at the hands of scammers and fraudsters.
Craig McAdam, head of dispute resolution at Slater and Gordon, said, “The impact on the wider economy of these frauds going unchallenged should not be underestimated.
“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. Having robust infrastructures can be crucial in stopping a fraud before it’s too late.”
On average, SME’s were targeted by fraudsters three times in the last year with a third of fraud cases reportedly being carried out internally by employees. Common types of fraud include false invoicing, exaggerated expense claims and CEO fraud.