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How can I protect my business from employee theft and fraud?

Posted By: On behalf of J. Kevin Stockstill, Attorney At Law // On:

If you are the owner or manager of a business, you should be aware that employee theft, fraud and other misdeeds are a common problem. These crimes can cause you significant losses and may take many forms including:

  • Theft (also known as larceny)
  • Skimming money by diverting business funds
  • Fraudulent disbursements such as check tampering, billing schemes, etc.
  • Embezzlement of inventory or raw materials
  • Stealing business opportunities by misappropriating customer lists or trade secrets
  • You can help prevent these misdeeds and the related losses by being vigilant and taking a number of proactive steps such as the following.

    1) Look for warning signs of theft in your employees, such as a sudden willingness to work overtime; lifestyles well above salary levels; drug and alcohol abuse; objections to procedural changes involving finances, inventory or supply matters.

    2) Supervise your employees more closely across the board.

    3) Use purchase orders and always verify incoming orders.

    4) Control cash receipts by using serially pre-numbered sales slips and conducting weekly audits.

    5) Make unannounced internal audits and have a yearly audit done by an outside firm.

    6) Strengthen computer security measures and restrict access to computer terminals and records.

    7) Closely track all business checks and lock blank checks (and signature machines) in a secure place.

    8) Install security cameras or other devices to monitor merchandize or inventory.

    9) Monitor accounts receivable closely. Make mail opening and posting separate functions, and always stamp checks for deposit only.

    10) Provide an easy way for employees to report theft or fraud by coworkers.


     

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