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SMEs face a unique challenge: fraud threats are growing, but enterprise-level security solutions often come with enterprise-level price tags. Unlike large corporations, most small businesses can’t afford dedicated fraud prevention software costing thousands per month. But that doesn’t mean they’re defenseless. So how can SMEs and startups build robust fraud defenses on a budget?
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Aaron Bugal, Field CISO, APJ at Sophos
“Fraud is a growing threat to SMEs often taking the form of phishing, invoice scams, and business email compromise scams. These attacks typically exploit uneducated employees and steal user credentials, rather than hackers employing advanced hacking techniques. Sophos’ 2025 Threat Report found more than 90 per cent of attacks involved credential or data theft, which enabled cybercriminals to impersonate employees and interrupt financial transactions.
“SMEs often lack the resources for dedicated cybersecurity teams, making them more vulnerable to fraud attempts. Hiring experts or investing in complex systems isn’t always attainable, but basic security practices upheld by all employees can still offer strong protection. Simple steps like deploying multi-factor authentication, restricting access to sensitive data, keeping software updated, and backing up critical files can prevent many fraud attempts. These measures are low cost, and do not require certified expertise, yet can still significantly reduce risk.
“While SMEs face limitations, many now use managed detection and response (MDR) or on-demand incident response for 24/7 monitoring and expert support during breaches. These options provide security assistance without the need for an in-house team, helping SMEs improve their defenses in a practical way.”
Daniel Garcia, Vice President and General Manager APAC at Kaseya
“For many Australian SMEs, the threat of fraud looms large, yet budget constraints often push advanced protection down the priority list. The good news is that robust fraud prevention doesn’t always demand high-cost software; it’s about automating your essential security tasks and bringing all your security tools together into one place.
“Security starts with human vigilance – training employees to spot phishing emails and understand common scam tactics is your first, most cost-effective line of defence. Beyond this, automating your regular security checks takes away the manual workload, allowing potential issues to be identified and addressed at a quicker rate, often before they cause larger problems. This prevents costly downtime and avoids the need to hire an expensive, dedicated security team.
“What truly makes a difference for SMEs is consolidating IT and security efforts into one easy-to-manage system. Instead of juggling different tools, which often means paying for multiple subscriptions and managing complex integrations, you get all your security warnings in one place. This helps you keep a close eye on your technologies and address issues quickly, not only defending against cyberattacks before they escalate, but also drastically cutting down on overall security expenses. By bringing together essential security checks, SMEs are turning scattered, costly security efforts into a strong, all-around shield, allowing their business to stand tall against growing fraud threats without spending a fortune.”
Kumar Mitra, Executive Director, CAP & ANZ, ISG, Lenovo
“Fraud is one of the most persistent risks facing small and medium businesses today. Beyond financial loss, it threatens customer trust and long-term growth – both of which are critical for SMEs working hard to scale sustainably. While software plays a role in protection, lasting security doesn’t depend on expensive tools. What matters more is adopting a proactive mindset and making smart, intentional choices that suit your business reality.
“It starts with knowing where you’re vulnerable. Even a simple risk assessment – done in-house or with basic guidance – can highlight gaps across people, processes, and systems. This gives SMEs clarity on where to focus limited time and investment.
“From there, small changes can deliver big impact. Regular software updates close known vulnerabilities. Strong, unique passwords protect access points. And adopting Zero Trust principles - where access is never assumed and permissions are limited to what’s needed – adds another layer of defense.
“But technology alone isn’t enough. People remain one of the strongest shields against fraud. Employees need to know how scams work and what warning signs to look for. Practical training, paired with a clear response plan, helps businesses act fast when issues arise.
“For SMEs, fraud prevention isn’t about spending more – it’s about leading with awareness, creating a culture of vigilance, and putting the right, realistic safeguards in place to build trust and resilience.”
Yvonne Sears, Founder / CEO, Elev8 Resilience
“You don’t need expensive software to understand your own business. Let’s take cyber fraud, crime using computers or the internet to steal data, identities, or intellectual property. For SMEs, the most common threats are phishing and ransomware. Here’s how you can build resilience without high-cost tools.
Firstly, know your critical data. What do you rely on to operate? Consider the impact if it was lost, tampered with, or exposed. Back it up regularly. Prioritise your most important files and test your backups. Enable multi-factor authentication (MFA). It’s a simple, powerful barrier against unauthorised access. Review access rights. Only give staff access to what they need. Remove it when roles change. Map your key assets. Understand how your systems and people could be exploited. Add approval checks. Especially for financial changes like new accounts or updated payment details. Educate your team. Staff are your first line of defence, train them to spot suspicious emails and links.
“Cyber fraud prevention starts with awareness, not software. Simple, smart steps protect your people and your business.”
Grant Crough, CISO / Founder, LEAP Strategies
“Too many businesses rush to buy tools, thinking software alone will keep them safe. In truth, fraud prevention starts with people, not products.
“Most cyber fraud still begins with a human clicking the wrong link. That’s why phishing simulations, education during staff on-boarding and regular staff training remain the most cost-effective defences available. Education breeds awareness, and awareness reduces risk.
“It’s also important to question the advice you’ve received. Many businesses are still relying on legacy solutions like VPNs for remote access because they “sound secure,” without understanding the risks. The right security advice should consider your business, staff, and setup, rather than an easy solution.
“And while you may not need enterprise-grade systems, basic security monitoring is now within cost effective reach. Managed Security Operations Centres (SOC’s) are increasingly accessible to SMEs and can alert you to threats before they become breaches.
“None of these require massive budgets. They do, however, require the right advice and a culture of security.”
Steven Nicholson, Founder, GearChange Business Advisory
“In 2023-24, the Australian Signals Directorate reported the average amount that small businesses lost to cyber-related fraud was almost $50,000, an amount that would put a hole in the cash flow forecast of most SMEs.
“As an experienced CFO, responsible for risk management, my advice would always be to hire an expert IT consultant and install best-in-class security software. Nevertheless, there are other things you can be doing to protect against fraud:
- Train Employees: Educate staff about recognizing and responding to cyber threats, especially phishing and business email compromise scams. Ensure change of bank details for suppliers and staff are confirmed by phone before actioning.
- Tighten IT Controls: Implement multi-factor authentication; ensure software patches are updated for known vulnerabilities; take regular backups of data; and limit access control to systems to only those who must have it.
- Segregate Duties: Authorise all payments and payroll as the business owner. Don’t delegate it to your bookkeeper or accounts team.
- Check Insurance Coverage: Transfer the risk of fraud loss to your insurance company with cyber insurance and confirm coverage for internal fraud risk.
“Don’t wait until you are the victim of fraud to action these suggestions – protect your business today.”
Rolf Howard, Managing Partner, Owen Hodge Lawyers
“SMEs can significantly bolster their fraud defenses with the use of technology – without it breaking the bank.
“Fraud, cybercrime and money laundering pose a multi-billion dollar threat to Australian businesses. With new AML/CTF obligations for ‘gatekeeper professions’ like ours, building a strong defense is non-negotiable. Vigilance and strong internal controls are paramount.
“SMEs must implement several strategies. Firstly, using technology to handle your Know Your Customer (KYC) verification is the best way for identifying clients and ensuring legitimate transactions.
“Secondly, establish robust Client Due Diligence (CDD) by understanding the true nature and purpose of client relationships, actively scrutinising unusual transactions, and being vigilant for ‘red flags.’
“Thirdly, employee training and awareness are paramount. Educate staff on common fraud schemes like phishing and fake invoices, fostering a culture of vigilance and establishing clear verification procedures for unusual requests.
“At Owen Hodge Lawyers, we’ve successfully integrated My DataBoss, which has proven to be a low-cost, high-value software option for our fraud prevention and AML/CTF compliance needs.
“And when you keep in mind that the costs of non-compliance could be as high as $200,000, the investment in technology is absolutely worth it.”
Rahul Bahl, Principal Consultant, ERA Group
“Fraud can be damaging or worst still be fatal to small and medium-sized enterprises.
“The good news is defending your business doesn’t require costly software. Disciplined processes and clear controls can reduce risk and protect cash flow without blowing your budget.
“Start by eliminating blind payments—transactions made without verification. Implement a ‘No Blind Payments’ policy supported by:
- Documented Authorisation: Every payment must be backed by matching purchase orders, delivery receipts, and invoices.
- Dual Approval: Require two-person sign-off above set thresholds.
- Delegation of Authority (DoA): Define clear spending limits by role and regularly update them.
- Segregation of Duties: Ensure different people handle ordering, receiving, and payment.
- No Early Payments: Never pay before verifying delivery and quality.
- Scheduled Payments: Avoid urgent, ad hoc requests that bypass checks.
“Questioning Payment Requests
Train staff to question any payment that is unexpected, urgent, or involves changes to bank details or communication channels. Always verify payment changes using known contact methods—not the details in an email. A short delay is better than a costly mistake.
“Avoid Storing Card Details
Never store debit or credit card information with suppliers. Use secure, one-time payment methods or virtual cards when possible to limit exposure and improve control.
“Preventing Internal Fraud
Internal threats can be as damaging as external ones. Mitigate them with:
- Mandatory Leave: Fraud often surfaces when staff take time off.
- Surprise Audits: Spot-check petty cash, invoices, or supplier activity.
- Access Controls: Limit system permissions and monitor audit trails.
- Whistleblower Channels: Offer a safe way to report suspicious behaviour.
“Fraud prevention isn’t just about implementing technology—it’s about structure, accountability, and building a culture of diligence. With simple, well-enforced processes, SMEs can stay protected prior to deploying expensive tools.”
Adam Henderson, Partner, Corporate and Commercial, Hicksons | Hunt & Hunt
“There are a range of measures that SMEs can establish for comprehensive fraud prevention without investing in expensive software solutions. A business can be impacted by fraud through the conduct of external bad actors or even through internal staff.
“Many businesses don’t consider that fraud can occur internally within their business. Implementing robust internal controls is crucial to reducing internal risks and supporting audits and investigations. For example, to reduce the risk of financial related fraud, businesses should require dual authorisations for all significant transactions and conduct bank reconciliations at least once per week. Separating financial duties among staff members, particularly for payment processing and reconciliation, can also be an effective approach in reducing the risk of financial fraud.
“With more SMEs using digital technologies than ever before, digital security measures such as implementing multi-factor authentication, maintaining strong password policies and secure wi-fi network infrastructure should be utilised to prevent external fraud from occurring. Regular staff training on common fraud schemes is also important to prevent external bad actors from taking advantage of well-meaning employees.
“If you are concerned about the risk of fraud in your business, having thorough documentation is essential to help you identify potential issues and effectively navigate any challenges that arise. This includes maintaining detailed transaction records, having straightforward approval processes, and conducting regular internal audits. A clear document retention policy will help track suspicious patterns and support potential investigations.”
Michael Russell, Managing Director at Finwave Finance
“You don’t need enterprise grade systems to protect your business from fraud, just smart processes and vigilance.
“At Finwave Finance, we’ve seen firsthand how small businesses are often targeted because they’re seen as “low hanging fruit” and lacking internal controls, separation of duties, or consistent oversight. But simple, low cost steps can dramatically reduce exposure.
“Start with the basics: enable two-factor authentication on all accounts, keep admin passwords separate from general users, and reconcile bank transactions weekly not monthly. These habits catch anomalies early.
“One of the most effective tactics is simply segregation of duties. For example, never let the same person raise, approve, and pay an invoice. Even in small teams, this can be achieved with smart delegation or using basic tools like Xero’s user permissions.
“Finally, build a culture of awareness. Most fraud isn’t technical, it’s opportunistic. Training your team to recognise invoice scams, phishing emails and internal red flags is worth more than any software subscription.
“Protecting your business starts with structure, not spend.”
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