Data security is not just a concern for big businesses, warn compliance experts. Small companies, such as the mom-and-pop mortgage shop, need to place an emphasis on protecting their client information.
But according to a recent study conducted by market research firm Ipsos Reid on behalf of document destruction company Shred-It, small business do not fully comprehend the impact a data breach could have and do not safeguard sensitive information as they should.
According to the study, 40% of small business owners have no protocols in place for securing data; this is up 5% from a similar survey in 2012. More than one-third does not train staff on information security procedures.
“We are urging companies to be more vigilant when it comes to information security,” said Shred-It’s privacy and security officer Mike Skidmore. He made the statement during National Small Business Week, which took place between June 17 and June 21.
“We have seen a consistent increase in small businesses without security protocols in place and a crucial first step for practicing effective information security is improving awareness of policies and procedures. Organizations face a lot of risks, but enforcing sensitive data safeguarding as a companywide practice will potentially avert both significant financial and reputational risk,” Skidmore said.
Shred-It made the following suggestions for small businesses to adopt:
1. Analyze possible security gaps in one’s organization, and within your supply chain, and work with security experts to assess existing security systems.
2. Implement ongoing risk analysis processes and create a policy specifically designed to limiting exposure to fraud and data breaches.
3. Regularly train employees in proper document management and encourage their adoption of security best practices.
4. Utilize special locked consoles to house sensitive materials that are waiting to be properly shredded.
5. Implement a “shred-all” policy so that all unneeded documents are fully destroyed on a regular basis.
6. Don’t overlook hard drives on computers or photocopiers; physical hard drive destruction is proven to be the only 100% secure way to destroy data from hard drives permanently.
7. Have up-to-date and effective computer network protection, including anti-virus software and a firewall.
Other sources had their own tips during National Small Business Week. Citizens Bank, Providence, R.I., said small business owners need to have proactive strategies in place to manage cash flow so it does not become a problem for their company.
They are able to create growth opportunities through reinvestment by making their capital work better for them.
Among the suggestions from Quincy Miller, head of business banking for RBS Citizens:
• Understand your operating cycle. Regardless of size, every business must deposit, monitor and manage cash, make payments, fund purchases, invest in their company, and receive payments. Reviewing and understanding each step in this cash flow cycle can help a company work more efficiently.
• Review your payroll process. If you pay your employees twice a month instead of every other week, you will be managing 24 payroll periods instead of 26 during the course of a year, making your company more efficient.
Direct deposit of employee paychecks into their accounts can also create efficiencies.
• Manage outgoing payments in an advantageous manner. Banks can help establish relationships with credit card companies that can speed up payments from customers while giving additional timing or flexibility for repayment to settle your account.
• Look at opening a business credit card. A business credit card has many advantages, including the establishment of a clear separation of business and personal finances. In addition to providing clarity in the day to day operations of your business, this arrangement can eliminate confusion during tax preparations. If you have employees with company cards, consider solutions that allow you to monitor, track and control the way those cards are used.
Speaking of credit, the National Association of Credit Managers noted that a number of small companies rely on the owner’s personal consumer credit to operate the business.
They may not be aware of, or know enough about commercial credit and commercial credit reporting to establish and build a strong commercial credit profile, which can help these businesses acquire better bank financing and the crucial goods and services needed from other trade suppliers on an unsecured basis.
So the organization created a fact sheet, “Commercial Credit Reporting: What Every Company Needs to Know.”
“NACM hopes the fact sheet will help companies build their credit and support their financial practices,” said NACM president Robin Schauseil. “It is imperative to eliminate any misconceptions and educate companies about commercial credit and commercial credit reports, especially among small businesses, the drivers of the nation’s economy.”
NACM began to develop the fact sheet earlier this year in response to reports from its membership as well as politicians who said many small businesses were falling prey to aggressive sales tactics from commercial credit monitoring services. Reportedly, sales people from these firms have told small business owners they needed to pay for a product that would improve and address errors in their company’s commercial credit report.
“Much like in the consumer credit world, companies have the right to view and address discrepancies in their credit report for free,” said Schauseil. “More than that, they have the right to not be taken advantage of by unscrupulous salespeople trying to scare up business by making false claims.”
NACM national chairwoman Toni Drake added, “It’s so important in today’s economy for business owners to separate their own finances from their companies’. They also need to separate their credit histories to ensure that they don’t become personally liable for their business’ troubles,” she said.
The fact sheet is available for free on the organization’s web site, www.nacm.org.