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Fraud against businesses is on the rise. Unlike the protection afforded to consumers, small businesses and limited companies need to meet certain eligibility criteria to claim compensation with the Financial Services Compensation Scheme (FSCS), with eligibility on a case-by-case basis that varies for different types of claims.

Due diligence, internet controls and risk management are crucial to avoid being scammed, and it all starts by appreciating that fraud can come from anywhere, including:

Third parties, unconnected to the business

If it sounds too good to be true, it probably is. Thoroughly question all unusual deals, opportunities, documents, and transactions, and encourage all your staff to embrace the same ethos. If you are in doubt, check it out first.

Ensure internal controls, policies, and procedures are in place and adhered to for anything that involves a financial transaction, such as the sale and purchase of all vehicles and stock and the transfer of any legal documentation, for example, V5s. This includes procedures for authorising, recording, and reconciling financial transactions and safeguarding the business’ assets.

This should be a core part of recruiting a new team member. UK employment background checks usually consist of some or all of the following, most of which are regulated by law: criminal record checks, right to work checks, DVLA checks (for employees driving on company time, and health checks (used exclusively for cases where it is a legal requirement. For example, eye tests for commercial vehicle drivers). It is also possible to verify education and employment background and social media screening (used by some employers to gain insight into a candidate’s values and attitude).

Conduct due diligence using a risk-based approach, such as checking the customer or supplier details you have on file and by using online searches. Never pay an invoice from someone you have not verified.

Watch your bank account every day to understand how money leaves your business, or enable your banking apps to notify you of money going in and out of your accounts, including:

Who has the authority to make those payments (have at least two people handling any payments, if possible)?

Fraudulent invoices for goods and services are widespread; it might look real, but is it?  Fraudulent invoices, often for well-known publications and scams related to advertising in charitable publications, are sadly all too common. If it doesn’t look or sound right, don’t pay; check it instead. Also, if a supplier changes their bank details, always verify this change is correct.

Care must be taken to ensure that you have good title to all stock and that the check is verified (if it sounds too good to be true, be suspicious). Similarly, you must know your legal responsibilities to customers in areas such as distance selling. A dealer won a recent case, with the judgement referring to the customer as ‘at best misleading and at worst untruthful’.

Ensure you have a cyber security policy, you can see our other post on this subject here.

9. Embrace UK Finance’s ‘Take five to stop fraud'

Take Five is an initiative led by UK Finance. It aims to encourage people to stop and take time to think before they act. Always remember these five rules:

Never disclose security details, such as your PIN or full banking password.

Don’t assume an email, text, or phone call is authentic.

Don’t be rushed – a genuine organisation won’t mind waiting.

Listen to your instincts – you know if something doesn’t feel right.

Stay in control – don’t panic and make a decision you’ll regret.

Action Fraud is the UK’s national fraud and cybercrime reporting centre. You can also get information about fraud and financially motivated internet crime.

You can also report fraud to the police if you know the suspect or they’re still in the area. Call 101 to speak to an operator.

Fraud is on the rise, so explore our top ten tips for avoiding it. 

Business fraud and how to avoid it: 10 top tips

We often hear from our dealer and broker partners that they want to set up their own diversity and inclusion (D&I) network, but they don’t know where to start, or that it seems like a complicated process.

At MotoNovo, we have learned from GROW (Generating Real Opportunities for Women), our internal Women’s Network, and from a number of other D&I initiatives that there are a number of things to consider when setting up an internal network. To help dealers on their D&I journeys, we’ve put together a whistle-stop tour of how they can get started.

Before we outline our learnings, we need to stress that there is no ‘right’ way to promote diversity and inclusion in a business and that the two most crucial factors are:

Leadership support and engagement in the programme.

A passion for creating a positive impact and a willingness to give it a go.

It's also important to stress that any impact an in-house network can make, no matter how small, is an achievement – every inch of progress is a success, and over time, these all add up.

Knowing where to get started can be tricky, but here’s the five-step process that helps us:

First of all, agree on the network's vision. What do you want to achieve, who is it intended to support, and how do you imagine it looking when it’s successfully underway?

For example, the Automotive 30 organisation, which aims to achieve a better gender balance within the automotive industry, has a vision to fill at least 30% of key leadership positions in the member organisations with women by 2030 through a “30 by 30” strategy.

Once you have the vision for your network, set three to four ambitious, SMART (Specific, Measurable, Achievable, Relevant, Time-bound) objectives for your network actions alongside them to show how they will be met in practice.

These could include a greater diversity mix in your business or its leadership, the development of the business’ recruitment, training and career processes and policies, or ongoing involvement with other local networks, such as the Chamber of Commerce or FSB, to help gain fresh insights, for example.

Involve a variety of people passionate about improving diversity and inclusion. After all, this is usually done alongside a day-to-day job, so you need people with motivation. These should include people inside your business but could include external people whose skills can add to the group or as guest speakers/contributors.

A transparent decision-making process is critical. Hopefully, ideas, inspiration and discussion will flourish, but it is essential that these lead to action and outcomes. Experience says this is about establishing controls with roles, responsibilities and accountability.

You could nominate a chairperson who has the final say after hearing from the various group members, or you could put things to a vote. However you do it, ensure it’s clear and communicated to the network members from the outset.

Earlier, we highlighted the importance of business leadership support and engagement in the programme. However, this does not mean that the network should be ‘top-down’ led, far from it. From our experience, being colleague-led while having a business leader as a sponsor is a valuable combination with the business leader supporting the chairperson, removing blockers, and managing budget requests.

If creating an in-house D&I network is not feasible, join GROW and be part of a network designed to support D&I across the automotive retailing sector; the team can be contacted at GROW@motonovofinance.com.

Continuing to drive positive change across the industry, take a look at how you can set up your own D&I Network.

News - September 2024

Business fraud and how to avoid it: 10 top tips

Creating a D&I Network: tips from our GROW Network

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