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The Property Pack


  • Written by News Co

Payroll frauds are one of the most common financial crimes in the world. According to the Association of Certified Fraud Examiners, payroll frauds cost US organizations more than $600 billion annually and are the fourth most common form of white-collar crime. Unfortunately, small businesses and startups are particularly vulnerable to these kinds of crimes because of their limited resources to protect themselves and their lack of understanding about how payroll processes work, and how they can be attacked by employees with ill intent. This article presents 10 security measures that can be put in place to prevent payroll frauds, even if you’re on a budget.

1) Get Started Early

Starting payroll processing as soon as you can will give you a much better chance of avoiding problems. The longer you wait, the more opportunity there is for error. In addition, if you start at an early date, employees won’t need to worry about any delays when it comes time for their first paycheck. They also won’t have any reason to complain and file claims over withheld wages.

2) Implement Secure Systems

Keeping your payroll software secure is not only necessary but it’s a moral obligation. Nobody wants their company’s data stolen, and you should be on high alert when it comes to payroll fraud. It’s critical that you keep a vigilant eye out for any attempted breaches of your information or systems and that you use all of your available resources to prevent them.

3) Pick the Right Vendors

Not all vendors are created equal. You want a payroll software solution that’s designed for your industry and you’ll want one with a proven track record of success.

4) Keep It Simple – Keystroke Logging Is Not Your Friend

One of the top security tips for dealing with your payroll software is to make sure you don’t fall into a trap where someone is logging your keystrokes or taking advantage of something like an autocomplete function. This can expose data about employee identities, bank information, passwords, and more. To prevent fraud, make sure you aren’t leaving these valuable pieces of data behind on purpose or by accident. Security experts recommend using different user names and passwords for all sensitive systems, including payroll software.

5) Reinforce Policies and Procedures

Make sure you have all your policies and procedures in order, including standard operating procedures. Then enforce them consistently. Make sure all the staff have been trained on these policies and that they’re aware of any changes as soon as they happen.

6) Regularly Train Employees

As with many of these best practices, prevention begins with training. Regularly train your employees on payroll fraud so they recognize what it looks like and is familiar with policies for preventing it. When you train them well and make clear policies, it’s likely employees will think twice before participating in any fraudulent behavior that could put your company at risk.

7) Don't Share Passwords

If you’re a business owner, it’s crucial that you don’t share your password with anyone. Not even your employees. Instead, choose a separate administrator account and give that person full control over payroll duties and other administrative responsibilities related to your payroll service provider. This is especially important if you have decided to outsource your payroll solutions or use an online or hosted solution.

8) Use Secure Networks

To help prevent payroll fraud, it’s important that all employees and managers are aware of these practices. To start, you can create a checklist of rules and procedures for your team members to follow when processing payroll checks. Also, it’s vital that management is involved in every step of employee paychecks—from deductions to deposits—to monitor for irregularities or potential tampering.

9) Rely on a payroll software system

One of your best weapons against payroll fraud is a professional payroll software system. This tool will automate many of your business’s processes, ensure that you and your employees are in compliance with federal regulations, and keep all vital data (including tax documents) backed up safely. You can use other tactics to protect yourself as well: hire only trustworthy employees, shred sensitive financial documents when you’re done with them, etc.

10) Stay Vigilant

Protecting your business’s financial information is an ongoing process. You’ll want to be proactive about protecting yourself against payroll fraud, or any kind of accounting-related crime. To keep both you and your employees safe, follow these best practices for keeping a watchful eye on your finances.


The most important thing that any business owner can do is keep an eye on their payroll. There are lots of checks and balances in place for oversight, but it’s ultimately up to you as a business owner or manager to verify what your employees are submitting. The above tips will help businesses develop best practices that can prevent payroll fraud from occurring.