The thing is, this success comes hand-in-hand with the risk of financial fraud. This is so often overlooked, that 51% of organisations have experienced some kind of fraud in the last two years, while the most disruptive incident has resulted in a loss of over $50M.
We often hear that startups are more likely to fall victim to fraud, and this is indeed a fact. But what makes this statement true and how can financial fraud prevention software help?
Let’s dive in and find out!
The growing concern about financial fraud
Fraud, including financial fraud, has always been a thorn in the eye for digitally driven businesses. And while nobody prefers it, It’s only natural for it to become even more of a risk as technology advances – trust me, it’s better to see the real picture when dealing with a threat.
You, as well as your employees and customers, engage in digital transactions on a daily basis through multiple channels – online banking, mobile payments such as ApplePay, and Google Pay, e-wallets like PayPal, and as of recently, cryptocurrency compensation through cryptocurrency exchanges.
It definitely is a world of endless possibilities for your business and customers, but as technology progresses, so do the tactics of fraudsters. Just as you’re doing everything to adapt and thrive in the challenging market, fraudsters are equally determined to find and exploit any weaknesses you might have.
Check out the most common types of financial fraud:
- Credit card fraud. With approximately 10.4 million credit card transactions happening per day in the UK, the chances of someone targeting your customers’ credit card details are huge. And there are several ways they can do so – steal the physical card, attach a device to an ATM, or trick them into entering the information themselves.
- Identity theft. Hackers can easily steal your, or the identity of your employees. They can send their target an email pretending they’re from the bank, or simply, install malware on your computer to steal sensitive information.
- Invoice fraud. Fraudsters also tend to send fake invoices for products or services never provided. And in the rush of day-to-day responsibilities, you may find yourself paying these invoices.
- Ponzi scheme. This type of fraud can be particularly damaging for your startup business, as a significant amount of money is normally at stake. You need the capital for your business, so you might invest in the hopes of earning more but If it’s a Ponzi scheme you stumble upon, you might as well say goodbye to your money.
- Phishing scams. Attempts at phishing scams are common among both businesses and individuals. They involve fraudsters posing as trustworthy entities, most often through emails or websites. For example, they can send you an email that appears to be from a reputable organisation or client, asking you to provide login credentials and financial data.
Whatever the type, a financial fraud won’t hurt only your pocket; it goes beyond that. It can ruin your reputation (which you’ve worked so hard to achieve), and disrupt the trust and relationship you’ve built with your customers.
How a financial fraud prevention software can help
Something that’s true in everyday life but especially among digitally driven businesses – for every problem there’s a solution. In the case of financial fraud as a risk for startups, this solution comes in the form of financial fraud prevention software.
By implementing financial fraud solutions like SEON, your startup can easily defend itself against potential threats. Here are some of the ways in which financial fraud software provides assistance to your startup:
- Real-time monitoring. It monitors customer activity, including their financial transactions and other activities in real-time, with the goal of detecting any unusual or suspicious behaviour. So, if any ‘’bad customers’’ attempt to breach your startup’s defenses, you’ll be timely informed and ready to respond and protect your business.
- Transaction verification. To add to the above, the software can verify only transactions that have met the requirements, while those that haven’t will be flagged for further review. This is incredibly helpful when it comes to invoice fraud.
- Improve customer experience. Maintaining the satisfaction of your customers is everything, especially when it’s a startup we’re talking about. If you haven’t invested in proper security measures, false alarms can frustrate your customers. Fraud prevention software, on the other hand, will make sure that doesn’t happen, safeguarding both your customers’ trust and the startup’s reputation.
- Customisation. You can also customise the software to fit your startup’s personal risk profile, meaning you can address potential threats in a way that’s secure and makes the most sense to you.
- Prevent chargebacks. The unauthorised transactions that result from fraud can easily lead to costly chargebacks, And as a startup owner, you must avoid costly – losing merchandise or facing higher fees.
The best thing about these solutions is that they’re designed with scalability in mind. They’ll adapt and grow alongside your startup.
Implementing good financial fraud software might seem expensive. However, It’s a small price to pay compared to how much you can lose if you fall victim to financial fraud. Your reputation and customers’ trust can be forever ruined, which impacts your startup’s success down the road.
When you have an easily accessible solution available, why leave it to chance? Launching a startup is challenging, as is running it. Worrying about possible threats is challenging. However, the most challenging aspect is recovering from financial fraud, and this is preventable.
Why startups are at higher risk
Not to say it’s true, but fraudsters often consider startups not as experienced as already established companies. As a startup owner, you can agree that this perception can put your business at risk. This is exactly why you should be prepared ahead and do everything that’s in your power to stop financial fraud from happening. Because once it happens, there’s usually no going back.
Startups that have entered new markets are also more vulnerable because they often face strong pressure to succeed. This makes them more willing to take risks, such as huge investments, or trust potential partners without verifying their claims. However, there are plenty of tips on how startups should enter new markets.
It’s also possible for startups to have limited resources, which again, makes them seem less experienced. This is the reason behind startups not investing in robust security measures at the very beginning. And sadly, this leaves them vulnerable to fraud, often getting cut off at the source.
Why financial fraud prevention is a must for startups
On its path to success, fraud prevention is undoubtedly one of the most critical aspects of your startup. Let me give you an example as to why.
Let’s that your recently launched startup has gained some traction, and naturally, you’re excited about each new order coming in. And suddenly you receive a huge order that will result in a significant boost in revenue and potential exposure.
Before you jump right in, you must ensure that this order isn’t just a pitfall. This can be done by verifying the legitimacy of the customers’ information and payment details in order to look for red flags such as mismatched shipping addresses. You then have to contact the customer to confirm the order. After all, it’s a massive order we’re talking about. All information must be double-checked.
If you get too excited, it’s easy to forget to do all of the above. One such mistake can cost you your business. But if you have financial fraud prevention software implemented, you can rest assured that won’t happen. The software will do all the monitoring, and in case of red flags, you’ll be timely informed.
Securing your startup’s success with financial fraud prevention software
All the best business marketing strategies are nothing without proper security, which is especially true for startups. Financial fraud can hit hard and fast, jeopardizing not only your money but your reputation and customers’ trust as well.
Financial fraud prevention software will do for you exactly what it promises – prevent financial fraud to safeguard your startup and make sure that your path to success is a secure one.
Fraudsters are everywhere and always on the lookout for opportunities to exploit. Don’t make the mistake of thinking it won’t happen to you. It can happen to everyone. Every startup and businesses of other sizes, as well as individuals, are targets.