Payroll Fraud Prevention Strategies 

Payroll Fraud Prevention Strategies 

Has your business been a victim of payroll fraud? It’s more common than you might think, resulting in substantial losses, budgeting constraints, and perhaps even loss of trust in the workforce. The main issue faced by employers is – payroll fraud can take several forms and the methods are constantly evolving! 

Businesses across the nation are in a constant strive to avoid payroll fraud. After years of working in the payroll industry, we’ve seen it all by now. Even better; we’ve developed a number of strategies to help identify and prevent payroll fraud, keeping your business’ finances safe and sound. 

What is payroll fraud?  

Payroll fraud occurs when an individual unlawfully secures payment from an employer through deceptive means. This can be through various forms, including counterfeit national insurance numbers, submission of fraudulent documentation, falsely claiming eligibility to work in the country, or identity theft.  

It can also happen through exaggeration of hours worked by an employee or claiming expenses that they are not entitled to. This form of fraud is more difficult to detect than those above, however, it results in a loss of money and severely affects your company’s bottom line. So, how can you avoid it? 

 Prevention strategies 

Background checks  

Perform thorough background checks on all personnel tasked with preparing, submitting, and accessing the organisation’s payroll and accounts. This measure ensures that individuals hired for these roles are trustworthy and maintain high levels of integrity. 

Reviewing payroll reports  

It’s advisable to review payroll reports post-processing to verify that employees are receiving accurate pay. Additionally, cross-referencing employees’ addresses and bank account details is crucial to detect any instances of multiple payments to a single bank account, a common method of perpetrating payroll fraud. 

Limit unauthorised access to payroll information  

In organisations, it’s considered a best practice for individuals with a genuine need to access payroll data to be granted individual login credentials. Each employee should receive their unique login information for accessing payroll data, accompanied by a policy strictly prohibiting the sharing of passwords. 

Separate your processes 

For smaller businesses, it can often be the case that one person is responsible for several functions. Particularly within HR and payroll, where one person is often responsible for managing both. However, we recommend separating the two. This means that payroll processes can be verified by multiple people, rather than one person taking care of the whole process. This will help to ensure all payments are processed correctly and are therefore less vulnerable to fraud. 

Outsourcing payroll  

Lastly, one of the best ways to avoid payroll fraud is… to not do your payroll. While this may sound strange, outsourcing your payroll to a specialised team will ensure your payroll is processed accurately and safely. It’s a more efficient and cost-effective way to keep your employees paid.  

At FTPay, we take payroll out of your hands and into our in-house payroll bureau, staffed by experienced payroll operators. We can assist you in maintaining your payroll, meeting HMRC regulations, and most importantly – avoiding any forms of payroll fraud.  

 And there are our top strategies for payroll fraud prevention. Our help, however, doesn’t stop here. Our team of advisors are on hand to help you with any payroll queries should you need assistance. If you’re looking to outsource your payroll, please get in touch with our Commercial Client Director, Fabrice Legris, at fabrice.legris@fiandertovell.co.uk.