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Employee theft or fraud is not new in the mainstream world; in fact, it has been prevalent for centuries, which makes it a common activity among most businesses. There is no denying the fact that fraudulent activities have always been costly to businesses. Survival after losing a significant portion of total revenues and profits in thefts or frauds is no easy feat. Recovering from this type of crisis is extremely difficult in today’s workplace. According to a study, employee theft, fraud, or embezzlement is the number one reason or cause of loss of inventory across the globe.

How Big Is The Problem?

Check out America's Best Bookkeepers Statistics reveal that employee theft or fraud is making business owners from every corner of the world lose a whopping $300 billion in total revenues and profits each year. In the US alone, the figure stretches up to $60 billion, making it one of the most widespread challenges faced by the business sector at all times. Business owners may have been lucky to conceive a winning business idea, but what about business management? Isn’t that important as well? For sure, it is! The truth is, business owners have to deal with a variety of threats throughout the business journey, and one of the most common threats is employee theft or fraud.

Business owners can only feel safe and secure in today’s business world if they minimize potential threats and bring them near to none. All salutations to superior technology and advanced tools and techniques that have helped us prevent employee theft, larceny, embezzlement, stealing, shoplifting, that all come under the umbrella of fraud. So, it makes me feel safe to say that employee theft or fraud is a very serious problem that is causing businesses to lose a significant portion of annual sales and profits. It can even kick a business out of the competitive race, which means failing market share and hence resulting in a gradual demise of the company. Check out America's Best Bookkeepers

What about Small Businesses?

Small businesses are more vulnerable to employee fraud or theft due to their defenseless business processes. They perhaps lack wisdom (financial and management) to protect their business from internal and external threats or frauds that restricts them to grow and expand their business operations. On the other hand, catching culprits or perpetrators involved is no easy feat at all. Employees usually who steal from you, typically work in groups (involving co-workers in any sort of fraudulent activity), which makes it even harder to catch the main culprit or the entire lot. So, you need to make efforts to minimize potential threats to employee theft or fraud start to ruin your entire business.

Why And Which Employees Usually Have The Reputation To Steal From Their Employers?

Check out America's Best Bookkeepers Every year businesses lose billions of dollars to employee theft and fraud, and the number of incidents is constantly rising. Besides having innovative tools, technology, and prevention methods, the rise is often seen as strange yet alarming. As per 10-10-80 rule, 10% of people will steal at any opportunity at hand, 10% will never steal from their employers, and 80% people will evaluate a particular opportunity at hand, give it a rational thought and then decide what to do with it. The good news is employers can change the perception of their employees in that 80% rule, those having second thoughts about stealing and can prevent them from involving in any fraudulent activity or misadventure, leading to repercussions.

Not every employee intends to steal from his/her employer. According to a study conducted by ACFE, employee theft or fraud is often seen in the age bracket of 31-49. This indicates that elderly employees steal from their employers more than their young counterparts.

Business owners need to take security measures if they expect to prevent employee theft and fraud within their company. They can do this by holding meetings regularly and set a precedent with a zero-tolerance policy for perpetrators. They can also hire private investigators to catch employee(s) involved in any fraudulent activity and hire accountants for analyzing bookkeeping records or business books. 

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers

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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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About Complete Controller® – America’s Bookkeeping Experts
 Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

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Regular inventory check, financial books audits, establishing a code of conduct, setting up organizational checks and balances, instituting policies and procedures, personally reviewing financial statements each month and other similar preemptive tools can be implemented in the business 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 bear testimony to the fact that employee fraud or theft has been on the rise in most parts of the world, America being on the top of the list. People are getting rightly concerned about the fate of their business, 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

If you expect to maintain complete control over your business and its daily operations, you have to establish a code of conduct for your employees. Most successful retail establishments across the globe consider it a sole reason for their success. No business can tolerate any 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 actually prevent employee fraud or theft.

Once employees would know the repercussions of their bad or opportunistic behavior, they will be more likely to 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 that they will have less motivation 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 10 years, intentions can change at any time which means you should never delegate the entire responsibility of managing everything on to your manager. Your accountant may be a pro at bookkeeping and maintaining the financial books, but you, as an owner, should take an interest in tracking core things like the handling of deposits and payments, invoices and order emails, and transaction documents. By setting up a surprise or regular organizational checks and balances, you 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 maintain a better control over the credit limits and finances.

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 any unethical or illegal activity. If you notice suspicious things going on around you such as a misplacement of important documents, employees that are reluctant to help you, or giving excessive attention or discounts—look into it.

Stretching an 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.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

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There is certainly no denying the fact that businesses fear embezzlement, fraud, and theft. According to a studies, embezzlement eats up a significant portion of revenue and annual profits. It restricts companies in creating a high-level impact in the market which further prevents them from expanding their business operations. Statistics reveal that trusted employees steal more from businesses than other individuals or stakeholders in the company.

Top executives and business owners from around the globe have devised methods to protect their business’s from fraudulent activities. But, still, no one has yet come up with a magic formula to completely prevent the unfortunate reality. Employee theft and fraud are eminent. Employees’ opportunistic behavior often leads them to commit financial crimes causing companies a great deal of financial stress and trauma. A staggering 87% of embezzlement cases come from trusted partners and employees, which is worth contemplating.

Small Businesses Are More Vulnerable To Fraud

The media is filled with thousands of stories of serious fraud. This indicates that the life of business owners, especially entrepreneurs, is never easy. They have to regularly come up with different ways to protect themselves against embezzlement. Inexperienced business owners often lack the seasoned wisdom to make a distinction between their employees, especially those who are stealing. Those who have a habit of stealing are quite often smart, confident, and less concerned about losing their jobs, as they already know the repercussions.

Those who steal without the fear of getting caught can ruin a business entirely. Small businesses may be more vulnerable to fraud, but that doesn’t mean that nothing can be done to prevent embezzlement. Being a business owner, it is your duty and responsibility to maintain complete control over your finances and other important matters of your business. Developing a framework and streamlining operations requires you to know every fine detail. From bookkeeping accounts and bank statements to inventory and clients, you must know everything prior to making important business decisions. On top of all of this, unfortunately, you must be aware of the possibility of fraudulent activities in your business as well.

Protecting your business against embezzlement may be hard, but it is not impossible. Below, we have outlined how you can maintain complete control over your business and prevent cash, goods, and sensitive information from becoming the next case of embezzlement.

Know Your Employees and Notice Changes in Their Commitment

Sadly, your employees are a potential threat to your business because you never know who will steal from you. It could be a new employee just coming into the company or a trusted veteran. However, with minimal effort, you can prevent a lot of anguish. To protect your business against embezzlement, you must know your employees well. Things such as sudden changes in habit and behavior, a lifestyle above salary-levels, overnight shifts, strong objections to new accounting regulations, discrepancies in financial records, drugs, gambling, etc. may be warning signs of embezzlement.

Keep a Check and Balance System in Place

Obviously, it is hard to manage everything manually. It is more beneficial to create a custom solution tailored to your business needs in order to record, track, and analyze things wisely for better decision making. In layman terms, what’s going in and out of your business must be recorded chronologically in order to have a clear snapshot of finances and other important business matters. Keeping your personal and business accounts separate allows you to track personal and business expenses independently. This way, you will gain a true picture of your business, which will further prevent embezzlement.

Create a System to Report Theft or Fraud

A reporting system system needs to be very carefully incorporated into a business, as it shouldn’t signal employees as a sign that you don’t trust them. Losing the trust of your employees is hard to remedy. Therefore, you must keep all of the complaints filed by your employees confidential and secure from their co-workers. This way, employees feel more encouraged and safe in reporting fraudulent activities that they think might be happening. This will help you protect your business against embezzlement.

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About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

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Employee embezzlement is a common occurrence in every type of business. This unethical practice is causing companies to lose a significant chunk of revenues and annual profits. Studies found that trusted employees steal from a company more often than newcomers. Moreover, companies lose a staggering 8% of annual revenues and profits due to employee theft or fraud. Prevention of employee theft or embezzlement may seem hard at first glance, but it is certainly not an impossible task. Those who are able to develop a theft prevention mechanism are able to save a lot of hassle for their businesses.

Business owners must learn the art of the game before tackling unlawful and unforeseen activities. No matter how seasoned your employees may be or how much trust you have in them, you should never ever trust them blindly. There must always be proper checks and balances in place for preventing your business from employee embezzlement. In America alone, businesses lose around $60 billion each year to employee theft or fraud, which is the biggest reason behind 33% businesses that filed for bankruptcies in the same year. The most common practices of employee theft or fraud are theft of cash, merchandise, payroll, sensitive information or more.

Who Is The Embezzler And What Are The Warning Signs Of Employee Embezzlement?

A embezzler is usually an employee perhaps with 4-5 years of experience working with the company or more. The person is usually described as honest, highly desirable, trustworthy, motivated, and bright and is considered a good, above average individual. Undeniably, the major motivation behind the wrongful acquisition of cash, goods, and sharing of sensitive information is money.

Potential warning signs of employee misconduct are:

1. A change in an employee’s habits and behavior
2. Lack of interest in completing their tasks
3. Poor time management in updating or reconciling the business books or accounting records

4 Tips to Prevent Employee Embezzlement

Create a Culture of Honesty

From corporates to homes, employee embezzlement is prevalent in all walks of life. You can never expect to maintain complete control over your business matters if you fail to create a culture of honesty. Those employers who are able to leverage a high-level control over their employees can expect to create a culture of honesty and privacy. This indicates that employees would feel reluctant to get involved in any misconduct which may lead them to face legal proceedings. As an employee, it is your moral duty to report any theft or fraud to higher management instead of supporting any wrongdoing.

Keep Track Of Inventory

No matter how much you may trust your inventory manager, employee embezzlement can occur anytime. You must always keep a close check on inventory yourself in order to be 100% sure that nothing is taking place under your nose. Keeping track of inventory provides you with a clear snapshot of your inventory level which will ease your decision making process. Besides keeping an inventory record of high-value items, you should also keep a record of damaged, low-selling, and obsolete merchandise.

Review Bank Accounts and Statements

For better audit trails, you must keep your personal and business accounts separate. Any discrepancies or fraudulent account activity found in bank accounts and statements must be taken care of wisely. Accurate bookkeeping records will lead you to a better position to make important financial decisions. For the prevention of employee embezzlement, you must keep a regular check in place for getting the true picture of your business’s finances.

Conduct a Pre-Employment Check

A pre-employment check reveals a lot about possible employees such as any criminal history in previous jobs and other similar things. You must screen new employees to distinguish the dishonest and prevent employees from stealing from you. With similar efforts, you will not only help prevent employee embezzlement in your business but also help your business grow exponentially.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

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Employees use sneaky ways to steal from their employers. They always think one step ahead of their employers and come up with unique techniques to trick and deceive them with their spiteful art. In 2017, a staggering 85,000 employees in the United State are reported to have stolen a total of $110 million from their employers. The data is collected from the field of retail only which is a shocking discovery for the people associated with this industry. Employees stealing from the cash register is one of the reasons why most start-ups fail to survive the first two years of operations.

Workplace theft has become a common occurrence in almost every type of business. It squeezes the profit margins of a business, which slowly and steadily eats up the entire business. The most common forms of theft in the retail sector are theft of cash and theft of merchandise. employees working in a retail establishment know everything about the business, including cash influx and outflow. Unfortunately, it is quite easy for them to steal from the business at a time of their own choosing without the fear of being caught.

Cost Of Employees Stealing From Cash Registers

One study finds that American retailers lost about $300 billion in goods and cash in 2017. These whopping figures reveal that there will always be employees that steal from their employers whenever they get a chance, especially when they are tasked to handle the cash register. This opportunistic behavior of the employees is costly to businesses, which often results in company employees overshadowing company interest and replacing it with their own that leads a company to fail miserably. Once all employees have collectively understood the benefits and advantages of moving together with the business interest, it brings about long-term sustainability and growth.

Undoubtedly, employees have the power to change the entire fate of a business by remaining true to their job. They can make a business grow exponentially and bring about significant returns. Where they are perceived as the ultimate game-changers, they can also make a business lose every penny. Employee threats can do serious damage to any business, especially if the business is of small scale.

How To Catch Employees Stealing From The Cash Register

Employees who tend to steal from you are always in search of loopholes that they can capitalize on. During shift changes, corrupt employees will always try to shift the cash shortage blame onto the next employee. Thus, cash register drawers must be assigned to one employee, instead of multiple people, in order to avoid internal conflicts. When multiple hands are involved, it gets harder to find the real culprit who stole from you.

Use Surveillance Cameras To Monitor Each Cash Register

Large retailers find surveillance or CCTV cameras quite useful for monitoring cash register drawer and to catch employees stealing from their cash registers. If your cashier intends to steal from you, you will know exactly where to check. Small retailers consider it expensive to install CCTV cameras, but such investments always pay off in the long run of the business journey. You can easily find inexpensive surveillance cameras available online and at local stores.

Place Extra Cash in the Cash Register to Know About the Intentions of Your Employees

This is a wise and easy way to know about your employees. Placing extra cash in the cash drawer reveals a lot about the morals of the person you are working with. If the extra cash is consistently missing, you will surely get to know who is stealing from you and whom to trust with handling cash.

Spot Inconsistencies in Your Records

Regular bookkeeping checks reveal the financial position of a business. A careful analysis should be made and discrepancies in cash and goods must be recorded for knowing where they appear to go missing. Prior to taking any action, such as firing an employee or filling a lawsuit, you must have concrete evidence of theft. 

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

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Employee theft and embezzlement are the main reasons behind the demise of most start-ups. Entrepreneurial business ventures are mostly initiated by inexperienced individuals who lack business management knowledge, skills, and expertise. However, business management doesn’t have to be that difficult to master. All that you need to do is learn the art of the game and know your employees well enough to create a powerful prevention plan against employee theft and embezzlement.

Unusual habits and changing behavior of employees plus a lack of timeliness in updating and reconciling accounting records reveal a lot about an employee and their commitment to their work. Detecting and preventing employee theft and embezzlement has become the need of the hour. For which, companies are even ready to hire professionals who devise creative ways to catch the culprits for their misconduct. According to studies, business owners from across the globe lose about 6% of their annual revenues and profits to employee embezzlement.

Blind Trust Has Its Repercussions

You might be surprised to know that trusted and established employees steal more from companies. How can a business expect to witness significant returns if their trusted partners, stakeholders or employees are going to steal from their business? This is alarming for the fate of your company because if you are not going to stop it, it’s going to slowly and gradually eat your business completely. In other words, unfortunately, employee theft and embezzlement is something that you will constantly battle throughout the course of running your business. There is certainly no magic formula that will stop it right away, but your constant efforts will surely have a positive impact!

We, as humans, have the tendency to fall prey to our desires. We look for an easy way to fulfill our wants and needs which often leads us to committing fraudulent activities like stealing supplies from homes and offices. This activity has to be stopped no matter what because it will ruin our motivation to earn legitimate money which, once lost, is hard to gain back!

What to Do To Prevent Employee Theft and Embezzlement

According to studies, 55% of fraudulent activities come as a result of a group activity, which means involving others to help commit financial crimes. This information bears testimony to the fact that employee theft and embezzlement is tough for an individual and a lot easier for those who work in groups for mutual gains, financial or personal. Certain things can help you protect your business against embezzlement, if executed perfectly, such as knowing and supervising your employees, maintaining a control over financial matters, cross-checking or auditing business bookkeeping, integrating and incorporating computer software for digital tracking, separating financial duties of employees and last, but not least, checking stock inventory on a regular basis.

Forms of Employee Theft and Embezzlement

People who most steal from you are clever and smart individuals who will always think one step ahead of you which means you need to constantly upgrade and change your measuring mechanism for evaluating the misconduct of your employees as they know your company inside and out. Employee theft and embezzlement normally exists in three forms; theft of cash, theft of goods, and theft of sensitive information.

What To Do For Getting Things Back On The Track

You need to discourage these fraudulent activities as much as you can because it will help you save a lot of money in the long run. In lieu of your company policy, you may document every single sale/purchase for your personal records, create and follow up on written procedures for ideal business management, keep track of inventory at your individual capacity and periodically review employee theft and embezzlement prevention measures.  According to experts, if each employee is held responsible for his/her own deeds, there are fewer chances of theft, fraud, shoplifting, embezzlement and other incedents of fraudulent activity.

If all preventive measures fail to get things back on track, you should consider hiring a professional accounting, bookkeeping or auditing expert who will sketch a clear picture of your finances for further coming up with a prevention plan to stop employee theft and embezzlement.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

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Small business owners are hesitant to report an employee stealing from their company as they do not want to involve the police, new research finds.

Employee theft may not be the number one concern that keeps a business owner awake at night, but it can bring about negative impacts on a company. Besides hurting the morale of employees and damaging a brand name and reputation, it can drain a significant portion of annual revenues and profits that eventually kicks a business out of the competitive race. In the wake of challenges and the ever-evolving mindset of stealing, companies cannot expect to survive for long. So, companies need to come up with loss prevention strategies and implement the proper tools and techniques to prevent employee theft and embezzlement.

Statistics Reveal a Different Picture

According to the study conducted and reports filed by the University of Cincinnati, research shows that 64% of employees steal from small businesses while only 16% of employers report the theft to the police. There is certainly no denying the fact that cheating employees are ever-ready to steal from a company whenever they get the opportunity. Small businesses are more susceptible and vulnerable to employee theft and embezzlement.

One report finds that companies with fewer than 100 employees have a higher percentage of theft and embezzlement cases. A staggering 92% of theft cases bear testimony to the fact that employees feel more inclined to steal from small companies due to their freedom to handle important business affairs like business management, bookkeeping, or accounting on their own. The University of Cincinnati research also found out why employers are reluctant to get the authorities involved and you may be surprised to know the reasons which include concerns about the criminal justice system and emotional ties.

What Makes Small Business Owners Hesitant to Report Theft?

There are reportedly four reasons why employers feel reluctant to report employee theft to the police and we will discuss those below.

No Real Victims

The nature and approach of business owners plays a significant role in determining the fate of an employee stealing from a company. Some owners are more concerned about recovering their losses than actually reporting the fraudulent activity. This category of people may even forgive their employees and give them another chance to prove their worth and loyalty or perhaps, under extreme cases to set a precedent, fire them after recovering their losses without reporting them to the authorities. Many business owners do not see victimization as a serious offense to be prosecuted officially and causing troubles beyond firing the employee stealing from the company. They believe that are many more things to worry about rather than this.

Attorney Advises Against It

The costs of prosecuting a perpetrator may be much more than what an employee actually stole from your company. Small businesses usually have scarce resources to deal with employee theft that restricts them from prosecuting a case in court. However, for large businesses and corporate level frauds, $20,000 or more, prosecuting a case is advisable.  Still, the slow restitution could take ages when you recoup the stolen funds. Therefore, many attorneys advise against reporting employee theft to law enforcement, especially if the successful prosecution outweighs any likely benefits that the employer intends to attain for their time and efforts.

Emotional Ties

Since trusted and seasoned employees often have a long work history and good reputation, they tend to steal more from a company than those who just joined the work force. Because of this, business owners often forgive the convicted employee based on emotional ties and history. This is probably one of the biggest precincts faced by small business owners that prevents them from reporting a crime to the local authorities.

They See the Criminal Justice System as Ineffective

Small business owners are often reluctant to get involved with the police in complicated issues involving employee theft. Obviously, the police are going to investigate the matter and may look for evidence of theft, which may involve interaction with coworkers that will create a negative vibe in the organization. On the other hand, there are some business owners who consider criminal justice proceedings as ineffective or incompetent. Quite often, there have been reported cases of law enforcement personnel caught in taking bribes from perpetrators which poses a question on the credibility of the justice system. So, rather than getting involved in lengthy and complicated prosecution methods, small business owners bare themselves from the trial.

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About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

protecting idendity fingerprints or id fraud from binary codes as like rain, guarding identity symbol and personal information
In general, people are good and employees are honest in their workplaces. However, there have been many occurrences of some employees trying to steal products or money from their employers. Speaking in terms of figures, the estimated losses attributed to employee theft amount to $200 Billion annually. In fact, business owners should remain alert in regards to the loopholes their business operations might have that would allow their employees to steal. Data from bookkeeping may help you detect this, but only after you have become a victim of employee theft. You need proactive solutions in order to prevent theft from happening in the first place. Here is a list of certain common practices that you need to keep in mind when safeguarding your business from the threat of employee theft. Implementing solutions into your strategy would significantly reduce the chances of your business facing any kind of employee theft.

1. Phony Vendor Accounts Set Up By Employees

This is one of the most common ways for employees to steal, by setting up phony accounts so that they are able to create fake invoices. By doing this, they are able to issue checks against these invoices to the vendor account. They are then able to have these checks deposited into bank accounts. This mainly involves misreporting expenses, such that $700 paid to a vendor may be entered into expenses as $800 (with a phony invoice as proof), enabling the employees to write themselves a check worth $100. Another somewhat similar issue is setting up a fake payroll for employees that have either quit or are retired.

The solution to this involves tracking purchases in a numerical order. Also, you can task different employees with different tasks. You should have one employee setting up a vendor account, a different employee writing checks, and another one verifying and recording invoices. In addition, you need to make sure that all employees are aware of the processes in your accounting and bookkeeping systems.

2. Theft of Checks

It is common for employees to take a check from the company checkbook and then either deposit or cash it. This is because banks do not usually verify the signature when it comes to company accounts.

This problem can be solved by keeping your checks locked and issuing them in a particular sequence. Ensure the reconciliation of cash accounts with bank statements on a monthly basis. It is advised that you should review bank statements in order to ensure that only the checks that have been authorized are cleared.

3. Stealing Directly from the Cash Register

This is mostly done when a cash payment is accepted by the employee at the cash register who can balance the drawer later on by voiding the particular transaction.

Solving this problem involves, first, keeping a check on the number of voids for each cash register on a routine basis. Along with this, you can have video cameras watch over the registers to ensure that employees do not put any cash from the register into their pockets.

4. Faking Expense Accounts

This is one of the most common ways that employees steal from their employer. They do this by submitting fake expenses or recording real expenses on a receipt multiple times.

The solution to this consists of properly recording a receipt of each expense and coming up with a way to ensure that any particular receipt hasn’t been submitted in the past. You can do this by requiring employees to submit unique identifiers for each expense receipt. For example, a receipt from a vendor could have a unique order number mentioned on the invoice. While a receipt from, suppose, an electrician or plumber for a business-related repair might have a unique invoice number. This will make it easier for you to catch a double entry and verify the authenticity of single entries.

5. Employees Punching In and Out for Coworkers

This is known as “Time Theft” and is a very common practice committed by employees of a business who utilizes traditional time cards to keep track of working hours. Sometimes, employees, themselves, fill out time cards for the days they aren’t present if the time cards are not checked on a daily basis.

One of the ways of solving such a problem is to adopt a bio metric punch in/out system. Utilizing fingerprint or face detection for keeping track of time can help. Many businesses have already incorporated such systems into their operations.

6. Stealing from Inventory and Falsifying Inventory Records 

Sometimes, employees may take items from the inventory that have not yet been entered into your inventory management system. Another thing that happens is the setting up of a phony vendor who does get paid for products which aren’t delivered to the business.

In order to solve this problem, you need to integrate physical inventory checks into your routine. While doing so, keep note of anything that is missing and utilize RFID tags to keep track of valuable items in the inventory.

7. Data Theft

The targets for this particular kind of employee theft are usually records of a customer’s data, which might be of personal nature. Other data that might be considered valuable can also be stolen.

Prevent this by requiring employees to frequently change their passwords. Delete the accounts of employees who have stopped working for you either due to retirement, quitting, or being dismissed. You should also restrict access, only allowing employees to access the data relevant to their job function. Cloud storage solutions are able to provide such security measures for the data of your business.

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About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.