Regular inventory checks, financial book audits, establishing a code of conduct, setting up organizational checks and balances, instituting policies and procedures, reviewing financial statements each month, and other similar preemptive tools can be implemented to prevent employee fraud and theft.
Unarguably, employee theft is costly to businesses. According to studies, businesses lose 9% of their annual revenues to fraud or theft, and it causes American business owners to lose about $60 billion each year. Yes, you heard it right! The staggering figures testify that employee fraud or theft has been on the rise in most parts of the world, with America at the top of the list. People are getting rightly concerned about the fate of their businesses, as they should be.
Protecting your business against employee theft and fraud is no easy feat. However, there are ways in which you can minimize fraud and prevent employees from stealing from you.
Establish a Code of Conduct
To maintain complete control over your business and its daily operations, you must establish a code of conduct for your employees. Most successful retail establishments across the globe consider it the sole reason for their success.
No business can tolerate illegal or unethical activity towards new and privileged customers, vendors or suppliers, employees, or the company itself. Therefore, it is safe to say that establishing a code of conduct can prevent employee fraud or theft.
Once employees know the repercussions of their bad or opportunistic behavior, they will likely avoid taking risks and stealing from you. Upon a successful hire, the code of conduct must be communicated, acknowledged, and readily signed by new employees so they will be less motivated to cheat or steal.
Plan Organizational Checks and Balances
Whether your business is small or large, setting up organizational checks and balances helps you to monitor everything on your own. It doesn’t matter whether your manager has been with you for the past ten years. Intentions can change at any time, so you should never delegate the responsibility of managing everything to your manager.
Your accountant may be a pro at bookkeeping and maintaining financial books. Still, as an owner, you should be interested in tracking core things like handling deposits and payments, invoices and order emails, and transaction documents. Setting up a surprise or regular organizational checks and balances can easily prevent employee fraud or theft.
Institute Policies and Procedures
Effective organizational policies and procedures help prevent fishy activities from employees. Once employees know the pros and cons of following organizational policies and procedures, they will know the repercussions and abide by the rules and regulations of the company.
In manual accounting, accountants usually have more control over credits and finances, which means there is an open opportunity for unethical accountants to steal from you by manipulating the financial books and records. This has to stop, no matter what, and you can prevent employee fraud or theft by introducing advanced or custom-made accounting software.
By integrating accounting software, you can expect to manage your payroll and control your credit limits and finances better.
Watch Employee Behavior
Where employees can turn things around for you and make you successful, they can also cause you to lose everything. No matter how much you trust them, you should always have a backup plan to discourage unethical or illegal activity. If you notice suspicious things going on around you, such as a misplacement of essential documents, employees that are reluctant to help you, or giving excessive attention or discounts—look into it.
Stretching the extra mile to know your employees’ changing behavior will help you save a lot of money and help prevent employee fraud or theft. You can install CCTV cameras, track vendor invoices, and important files, employ efficient accounting software, give employees fringe benefits and bonuses, arrange weekly/monthly workshops to help discourage unlawful or unethical activities and prevent employee fraud or theft.
Conclusion
In conclusion, safeguarding your business against employee fraud and theft demands a proactive approach. Implementing preemptive tools like code of conduct, organizational checks, and policies, coupled with continuous monitoring, helps create a culture of transparency and accountability.
Recognizing the escalating financial impact of employee fraud, these strategies, when integrated and diligently applied, serve as a formidable defense, protecting your business from potential losses and preserving its integrity. Stay vigilant, establish robust preventive measures, and empower your business to thrive in a secure environment.
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