4 Ways To Decrease The Risk Of Payroll Fraud
Recent statistics have shown that the figures related to payroll fraud in UK small business has risen sharply by 50% in the last two years. It is thought that the increasing demands to keep a company running within a tough economic climate has pushed owners closer and closer to the edge of morality and left many of them with little choice when it comes to keeping their business afloat.
The predominant method for this type of fraud is to deduct the relevant income tax and national insurance from employees’ pay packets but then invest this back into the company rather than passing it on to HMRC. This is by no means the only way that payroll fraud is being committed though and so here are a few ways you can decrease the risk of it occurring within your company.
Make Regular Checks On Your Payroll –
Because of its complexity, payroll is often something that business owners don’t want to get their hands dirty with, but this could lead to employees taking liberties because they know it will never be checked. The best thing to do is to verse yourself in at least the basics so that you can partake in regular checks of your payroll department to ensure everything is being conducted in the right way. It’s understandable that you would want to leave this area of your company to the people that understand it more but totally neglecting it could lead to problems.
Ensure Employees Are Aware Of The Consequences –
As with anything, part of preventing payroll fraud from occurring is educating the people that are most likely to do it (your employees) as to the consequences should they go through with it. This includes consequences for the business as a whole as heavy fines are issued by HMRC, as well as personal consequences in the form of discipline procedures and the termination of their working contract with your company.
Incorporate Segregation Of Duties –
Segregation of duties is a procedure that limits the risk of payroll fraud being undertaken by ensuring that no single person has complete control over more than one area of your payroll department. This typically means that the pay-checks are generated by one person and then checked and reviewed by someone different. This eliminates the temptation to indulge in any wrongdoing, for fear of being caught out, and also means that honest mistakes are more likely to be picked up on.
Hire An Outsourced Payroll Solution –
One of the best ways to decrease the chance of payroll fraud within your business is to remove all temptation from your employees and put your payroll in the hands of professionals with years of experience. Employees of a payroll bureau are less likely to commit fraud due to the fact that it will not only damage your company but the one they work for too, and because they will have been heavily vetted by their company. Having an external company carry out your payroll will also remove temptation that you as a business owner could experience to take extreme measures in keeping your company going. Measures that will ultimate come back to haunt you anyway.
A managed payroll provider, such as this, is also a great way of ensuring your employees are paid correctly and consistently without you having to take time out of your busy schedule. It also means you can free up more resources that would have otherwise been used on training and admin materials.