Lapping Scheme

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Definition of 'Lapping Scheme'

A lapping scheme is a type of fraud in which a person or organization uses the funds of one customer to pay another customer. This can be done by intentionally delaying or omitting payments to one customer, and then using those funds to pay another customer. The goal is to make it appear that all customers are being paid on time, when in reality, some are not.

Lapping schemes are often used by businesses to cover up cash shortages or other financial problems. They can also be used by individuals to steal money from their employers or other organizations.

Lapping schemes can be difficult to detect, as they often involve complex financial transactions. However, there are a few things that you can look for if you suspect that a lapping scheme is taking place.

* **Unexplained delays in payments.** If you notice that your payments are being delayed or omitted without explanation, this could be a sign of a lapping scheme.
* **Inconsistent records.** If the records of your payments do not match up with the actual payments that have been made, this could be another sign of a lapping scheme.
* **Missing or altered documents.** If you notice that important documents, such as invoices or receipts, are missing or have been altered, this could also be a sign of a lapping scheme.

If you suspect that a lapping scheme is taking place, it is important to report it to the authorities immediately. Lapping schemes are a serious crime, and they can have a devastating impact on the victims.

Here are some additional tips for preventing lapping schemes:

* **Keep accurate records of all your payments.** This will make it easier to spot any discrepancies or delays.
* **Require multiple signatures for all payments.** This will make it more difficult for one person to approve and make a payment without the knowledge of others.
* **Have regular audits of your financial records.** This will help to identify any potential problems early on.

By following these tips, you can help to protect yourself from lapping schemes and other financial fraud.

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