Fraud within the business sector increased by 74% in the past year and cost British businesses about £705m in the last six months, according to a report from accountants BDO Stoy Hayward.

But according to the report, increasing personal debt and greed were the main reasons tempting people to defraud companies.

BDO's Fraudtrack report said the rise was the largest since their research began in 2005. Simon Bevan, head of BDO's fraud unit: “Businesses need to be aware that their biggest threat is not organised criminal gangs, but their own 'trusted' internal management and people they do business with every day.”

He added that almost half of reported fraud cases were accounted for by management fraud.

Mr Bevan said: “The combination of spiralling personal debt and desperate employees spells real danger for business. Especially when, sadly, our figures provide clear evidence that commercial organisations of all types and size throughout the UK are currently failing, in some cases quite spectacularly, to get to grips with the fraudulent activity of their staff.”

He said the figures only showed the value of reported fraud, and the real cost to British businesses could be much higher, particularly if the activities of rogue traders in the investment sector were taken into account.

However, prison sentences for fraud have risen only slightly in recent years, to an average of just over three years, and are much lower than in many other countries, Bevan complained. In the United States, large frauds can carry sentences of up to 20 years.