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Fraud scams are a sad reality in today's business environment. With cases of identity theft and financial fraud on the rise, businesses, more than ever, need to learn how to safeguard themselves. The following tips can help small businesses limit their exposure to fraud.

1. Commit the resources. Compared to larger companies, small businesses tend to be more susceptible to fraud due to the limited fraud prevention resources and control measures put in place. Small business owners often overlook prevention controls which is unfortunate as any loss occurred by fraud may have a big impact a small business' bottom line.

2. Educate yourself. From billing schemes to payroll fraud to cheque tampering, the best way to prevent fraud is to educate yourself and your employees of the various types of fraud scams that could potentially impact your business.

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3. Establish anti-fraud policies. It's vital to assess which fraud schemes pose a greater threat to your specific business. From there, you can develop processes to help limit these risks. Some examples include: Using a paper shredder to destroy all confidential documents, and ensuring two people sign off on all cheques and provide expense approval.

4. Establish hiring practices. Fraud isn't just limited to outside sources. In many cases, fraud is often conducted inside the company. When hiring employees be sure to check references and verify past employment.

5. Conduct surprise audits and inventory counts. Conduct surprise audits and reviews of specific areas or departments of your business that are more vulnerable to fraud. Also, high-value items should be inventoried regularly.

6. Review all financial records. Make sure to review all financial and credit card statements before passing them along to your bookkeeper or accountant. When reviewing your statements look for any suspicious tampering signs such as missing cheques, unknown payees or payments made out of sequence.

7. Invest in IT security. Invest in anti-virus, firewall and spyware detection software to help prevent cyberattacks. Also consider changing passwords every month and refrain from using easy to hack passwords.

8. Keep diligent records. Keep a running tally of the trusted vendors and contractors you regularly do business with and be on the lookout for any out-of-place invoices for goods and services you did not purchase.

9. Look for resources. As a small business owner, you're most likely juggling a variety of duties and tasks that overseeing the business' anti-fraud risks measures may be outside your forte. Look at trusted associations and government agencies to help educate you about the most recent anti-fraud measures. Sites like the Canadian Anti-Fraud Centre and the Competition Bureau's Little Black Book of Scams can provide you and your business with key information.

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10. Ensure your business is insured. Work with an insurance specialist to gauge what kind of insurance can best suit your business' needs if your business does fall victim to fraudulent activities.

Geordan Robertson is the senior manager of small business at Meridian, Ontario's largest credit union.

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