As the number of businesses in the US continues to increase, it’s no surprise that fraudsters are motivated to initiate financial frauds.
According to recent figures from Statista, 347,000 new businesses were established in the US in the first quarter of 2022. And the number is growing as the country has a high rate of entrepreneurship and a culture that encourages innovation and risk-taking.
But as the number of businesses in the US increases, so does the risk of being affected by financial fraud. In fact, PwC’s Global Economic Crime and Fraud Survey 2022 revealed that 51% of organizations suffered fraud in the past two years, which was the highest in its 20 years of research.
Startups are particularly vulnerable because they often lack the resources needed to identify and prevent fraud attempts. This is especially true when it comes to financial fraud, which is often committed by people who have legitimate access to their accounts and can make transactions without raising any red flags.
This is exactly why it’s so important for startups to make smart decisions when it comes to their financial system. This ensures that they don’t get caught up in the lies and deceit that fraudulent people use to take advantage of them.
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Make Sure to Choose a Trusted Banking Partner
As a startup, you’re going to need to handle some fairly sensitive information. This means that you’ll have to choose a trusted banking partner that has implemented cutting-edge banking solutions and can help you with your financial needs.
Moreover, a trusted banking partner has all the necessary resources along with compliance solutions like anti-money laundering tools that help them expertly manage a client’s financial needs. Thus, make sure to choose a banking partner that has embraced banking AML (anti-money laundering) tools and has a proven track record of handling your business’s needs. Know more.
The market for AML solutions is growing rapidly due to the increasing cases of financial fraud. In fact, the AML market is estimated to reach $5.8 billion by 2027, according to MarketsandMarkets, which is a huge increase from its current value of $2.8 in 2022.
Choosing a banking partner with modern solutions will help you develop a solid finance strategy with minimum loopholes that can be exploited by bad actors. This can be difficult for startups, which is why many of them deal with smaller banks or credit unions rather than larger institutions.
But even though these smaller banks may have fewer resources than their larger counterparts, they still can provide excellent service, and they’ll be just as eager as you are to make sure your business is successful.
Use Big Data Analytics to Make Well-Informed Decisions
Big data analytics is the process of collecting, storing, and analyzing large sets of data to spot trends and patterns that can be used for decision-making.
Startups are always looking for ways to make the most out of their limited resources. Big data analytics can help startups do just that by providing them with actionable insights about their business operations, which can then be used to save money and increase revenue.
For example, a startup may use big data analytics to analyze its sales funnel and find out which channels are working best for its product. This will allow the startup to focus on those channels while cutting down on unnecessary expenses, such as marketing campaigns that aren’t performing well enough.
Moreover, banks like BNY Mellon, Morgan Stanley, Bank of America, Credit Suisse, and PNC are already looking to implement big data analytics in banking. Startups should also use big data analytics to create foolproof financial systems that allow them to make well-informed decisions with minimal effort or oversight from management.
Keep Track of Invoices, Payments, Expenses, and Billings
Keeping track of invoices, payments, expenses, and billings can be a daunting task for startups. It’s easy to lose track of what you owe, what you’ve been paid, and how much money you have coming in.
However, it’s important to know where your money is at all times. If you don’t know where your money is going or what expenses are coming up, you may find yourself struggling to keep up with bills or falling behind on payments. This can make it difficult for you to stay afloat.
In fact, according to the Bureau of Labor Statistics (BLS), 20% of new businesses fail to survive in the first year of operations. And mismanagement of finances could be partly responsible for these failures.
If you’re a startup looking to create a foolproof financial system, here are some tips for keeping your finances in order:
- Keep track of money coming in and going out. With all the different ways there are to accept payments these days, including cash, it can be easy to lose track of how much money you’ve brought in and spent. Make sure you always know exactly how much money is coming in and where it’s going out.
- Monitor your bills with automatic payments. Paying bills manually can take up precious time and cause confusion about what has been paid and what hasn’t. Thus, setting up automatic payments through your bank can help. This way, you’ll never miss an important payment again.
Have a Team of Advisers and Mentors
Many startups are full of exciting ideas and ambitious plans, but they often lack the experience to create a foolproof financial system.
The solution? Hire a team of advisers and mentors who can help you navigate your company through the turbulent waters of business growth.
These professionals can be invaluable in helping you create a foolproof financial system for your startup. They can provide advice on everything from setting up accounting software to determining which employees need to be hired and how much they should be paid. They can also offer guidance on things like taxes, insurance policies, and other legal matters that may affect your business.
A good team of advisers and mentors will be able to help you avoid mistakes that could cost you money down the road or even put your entire company at risk.
Startups are often led by people who are passionate about what they’re doing. They’re willing to do whatever it takes to make their business succeed, and they aren’t afraid of taking risks.
But when you’re starting a new business, it’s important to have a solid and reliable financial system in place so that you can keep track of your finances and make sure your startup is running smoothly.