If you ask most business owners if payroll fraud is an issue they constantly deal with, the majority of them will say no. And… the majority of them would be wrong! Unfortunately, security and fraud are two common issues when it comes to the payroll department, so it’s important that your company stay two steps ahead of any wrong-doers to prevent these problems from costing you thousands of dollars down the road. Today, we’ll be taking a look at how implementing payroll software (as opposed to managing payroll via manual processes) can help prevent fraud and keep your business protected.
Protect Your PII from Physical Theft
Every business in the United States is required to keep contact information, Social Security numbers, and other types of PII (Personally Identifiable Information) for each and every one of their employees. Most of the time this information is kept secure, but in the event of a security breach, the stolen information can have a massive effect on both the employee and the company they work for. That’s why storing your files digitally (as opposed to physically) is the preferred option for most businesses. By doing so, you’re effectively preventing the information from physical theft, and (assuming your payroll provider has top-of-the-line security measures) you should be protected from digital theft as well.
Information is Password-Protected
The easiest way for digital information to be viewed, altered, or stolen is by accessing a company computer. Fortunately, any reputable choice of payroll software will include password-protection for each user, which prevents other people from accessing the system. You can also set limits on the information individual users can see, limiting them to only information relevant to their job duties. Of course, passwords can eventually be broken so we recommend updating them monthly to ensure the highest level of cybersecurity for your local system. Some systems even allow you to set passwords for individual files or folders, further locking down vital company information.
T&A Software Helps Prevent Time Card Fraud
A common tactic that many businesses fall victim to is time card fraud. This can take place in multiple forms, some as simple as “buddy punching” and others more in-depth like time card modifications. If your company uses physical timesheets, this is especially susceptible to fraud, since employees can essentially write down any hours they see fit. Fortunately, this is all easily preventable by using T&A (Time & Attendance) software, which records employee clock in/clock outs digitally. Once created, these records can not be modified (except by system administrators). More advanced systems even offer features such as GPS time card tracking, which helps ensure off-site employees are on time on-the-job or wage notifications, which send an alert if there are any abnormalities in an employee’s time card records.
Stay Safe With Direct Deposit
Once payroll has been distributed, you may think you’re safe, but once again that is not the case (at least if you use paper checks!). Paying your employees via physical checks may seem like a suitable option, but it actually unnecessarily opens you up to payroll fraud since physical checks can easily be altered. However, this can effectively be prevented by paying your employees through direct deposit using your payroll management system. Doing so not only ensures that payments can’t be altered at a later date but also helps keep an accurate record of your outgoing cash flow.
Records Are Maintained
Whether you’re preparing for an IRS audit or simply performing an internal review of your own, it’s always important that you keep detailed and accurate records of everything that goes on in your business. This can pose quite a challenge if you’re still managing the majority of your company on paper. After all, folders and file cabinets can fill up quite quickly, making even simple document retrieval a time-consuming task. However, if you use a digital payroll system this won’t be an issue since you’ll need only to use the “Search” function for instant data retrieval. If you choose an all-in-one solution like UZIO, you’ll also be able to search through HR documents using the same process (through the same interface!).
Keeping Profits High & Risk Low
Ultimately, the security and safety of your business lie solely in your hands. Without proper preparation, preventative measures, and accurate recordkeeping, your business is bound to fall victim to payroll fraud (it’s only a matter of time). However, by taking an active approach to internal security and replacing manual processes with digital ones, you can minimize security risks to your business, ensuring proper security and PII protection for all.