Keep your eyes and ears peeled
By: Rachel Covington
Trusting your employees is necessary when running a business. But, sometimes that trust is broken, and it is crucial, as a business owner, you do not fall prey to employee fraud and theft. There are many different types of fraud, but the common ones include larceny, embezzlement of company materials or inventory, stealing business opportunities or company lists, fraudulent disbursements and skimming or diverting business funds. Prevention and detection are two key components of reducing any business revenue loss. Employees who steal are more likely to start after working at a business for years. How can you prevent this type of disaster? Follow these six, simple steps to easily avoid employee fraud.
- Watch for suspicious behavior – Know your employees. You notice Bill, who normally dresses casually at work, is now rocking Rolexes and Armani suits. This could be a red flag, as well as, employees suddenly wanting to stay late who normally wouldn’t, drug and alcohol abuse, or even employees not wanting help with a specific job. These could all be potential threats to your business. Still, be careful not to falsely accuse anyone for it could result in a lawsuit against you and your business.
- Enforce a code of conduct – Rules are needed when you own a business. Having a code of conduct will help aid with employee’s awareness of these rules and lay out the consequences beforehand, to prevent fraud and theft. Inform employees upon hiring and be sure you follow your code of conduct, as well. In other words, practice what you preach.
- Conduct random audits – Keep these unannounced and as random, as possible. This ensures employees will be caught off guard when conducting these audits. If they are innocent, they will not object. Also, avoid assigning one person to handle business finances. It is better to have at least 2-3 people assigned to these types of tasks to better prevent fraud and theft.
- Install computer security software – Even if you have your own IT (Information Technology) department, it is wise to understand your business’s computer system and software. No one should have access to secure business records besides the owner(s), accountant(s) and of course, the IT department. There should be security software installed on all company computers to ensure extra precaution. Security cameras are also suggested but certainly not required.
- Keep employees aware – We suggest informing all employees of the different types of fraud and the consequences, upon hire. Holding them accountable from the beginning will alleviate any issues to come, in the future. This also allows for a certain level of comfort when reporting any tips and keeps employees educated on the proper procedure of dealing with fraud issues. You may even want to set up an anonymous reporting system so employees feel more comfortable reporting these issues.
- Maintain a positive work environment – Employees want to feel comfortable and safe at their place of employment. Keep it organized, clear, simple and fair. Keep lines of communication open so employees feel safe and be sure to lead by example. If you maintain a positive environment, it makes it hard for employees to build resentment towards you and the business. A positive atmosphere makes for a well-rounded business.
So, trust your employees but protect your business, as well. Fraud and theft happen in businesses more often than not. This can result in major financial loss, legal costs, and all over chaos for the business. Having a set plan in place offers piece of mind because preventing fraud and theft is less stressful than dealing with the consequences, later.