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What Fraud REALLY costs….

Why commercial crime kills businesses.

When a company suffers a loss from internal fraud that loss of course comes straight off of the bottom line profit.

Company A works on a 20% margin. Consequently a loss of say 1 million is effectively 5 Million in TURNOVER that’s been lost. The indirect consequence is that the company could be overstaffing, underselling or even inflating their prices above market expectation to cover a loss that they don’t realise is happening.

Undiscovered fraud within any company skews everything. From capacity calculations to margins and of course it stilts growth. Money that could be used on staff development and training, new sales material, marketing or any number of things just dissapears from the overall budget to service the needs of the self-serving fraudster.

Over the years I’ve encountered companies that upon discovering fraud and investigating it with tangible learning outcomes have gone on to have bumper years once the loop holes are closed. The reality only then sets in as to the indirect cost of the loss.

Let’s not even try to factor in the loss of focus and productive business time that is channeled into fraud investigations as they go through the motions.

Fraud costs companies in more ways than they realise at face value. The key to risk reduction is on-going tightening and balancing of controls, self checking mechanisms and periodic training and review. This is where people turn to Certified Fraud Examiners for help and guidance. Their role is not limited to the investigation of commercial crime, it extends to understanding business processes and procedures required as best practices to close the gaps. A good fraud investigator stays up to date with the relevant company regulations of the country he works in and ensures that these are taken into account during an investigation.

At the end of the day, an investigative outcome is always required. This should however be balanced by pragmatic learning outcomes that help guide the client to secure themselves against recurrence of the incident.

Don’t let your companies growth be stunted by Fraudsters!