Employee Fraud: What to Do When You Discover an Employee Has Been Stealing

Businessman upset by the accusations of colleagues
For business entrepreneurs and small business owners, employee fraud can be a difficult subject and certainly an intimidating task. When it comes to the prevention of theft, stealing, larceny, shoplifting, and embezzlement, which all come under the umbrella of fraud, employers need to come up with a sensible plan and execution strategy to protect their business from potential internal and external threats. According to studies, employees can change the entire fate of the company they are working for by remaining true and honest with their profession. However, those who intend to steal from you need to be held accountable for their fraudulent behavior. A precedent for the company must be set, which will help prevent future theft and fraud.

In the US alone, businesses lose about $70 billion in annual revenues and profits due to employee theft and fraud. This indicates that employee theft is inevitable. However, businesses can minimize potential threats by devising theft prevention techniques and implementing systems that will help them counter impending threats, either internally or externally. Employees who intend to steal from you find sneaky ways to cheat or steal and will take advantage of the loopholes an organization may have. They are well aware of company’s processes and systems that it uses to manage its business affairs.

It’s Never Easy to Find the Right Person Involved in Fraud

Small business owners counter a lot of problems regarding employee theft and fraud throughout the course of their business journey. Business owners must play a predominant role in minimizing theft threats and danger that may hurt the integrity and long-term operations of their business. However, catching those involved in theft or other fraudulent activities is no easy feat. 

Why Employee Theft Happens

There are numerous reasons why employee theft and fraud may happen. It may occur due to personal reasons like gambling, maturing debt, emergencies, personal issues with the owners of the company, or perhaps due to the opportunity at hand. Besides going into the details of employee theft and what makes someone steal from a company, we will briefly explain it with the 10-10-80 rule.

It states that 10% of employees would never steal from a company, 10% would take any opportunity at hand, and 80% would access the opportunity by examining their needs and determining whether or not they should commit the act. This 80% is what companies need to prevent from happening through effective preventive measures and techniques.

What to Do When You Discover Employee Theft or Fraud

Small businesses are often reluctant to involve the police when they discover employee theft or embezzlement happening within their company. There are four choices to make when you catch an employee stealing from your company. You can follow disciplinary procedures and fire your employee, call police for criminal offenses and proceedings, call your attorney, or call your insurance agent.  

Disciplinary Procedures

If you have evidence of employee fraud, you can simply take actions stated in your disciplinary procedures. You can recover your losses by asking them to return what they stole or compensate the company so that legal procedures are not pursued, which may result in jail time. Once you recover your losses, you can fire the culprit or not—as you deem appropriate.

Call Your Attorney

You can also call your attorney for proper legal proceedings against the culprit. They may help you file a lawsuit against the perpetrator. Also, they may help you find and hire a forensic accountant who will review and investigate your bookkeeping and accounting records in order to file a strong claim against the perpetrator.

Call the Police

Once you’re done working with your attorney, calling the police to report employee theft or fraud seems entirely appropriate. However, having the police show up at your place of business may disrupt your operations, which means additional disruptions to your business such as taking statements from coworkers and employees. You must be very careful to make the right choices for the fate of your company.

Call Your Insurance Agent

If your business is insured against employee theft or fraud, remember to call your insurance company to recover your losses. If you have been paying for the insurance fees, you deserve the right to recover for your losses.

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