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. Business owners should remain alert regarding 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. It would be best if you had proactive solutions to prevent theft from happening in the first place. Here is a list of certain standard practices that you need to keep in mind when safeguarding your business from employee theft. Implementing solutions into your strategy would significantly reduce the chances of your business facing any employee theft.
Phony Vendor Accounts Set Up By Employees
This is one of the most common ways for employees to steal by setting up phony accounts to create fake invoices. By doing this, they can 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 numerical order. Also, you can task different employees with different tasks. It would be best if you had one employee setting up a vendor account, a different employee writing checks, and another one verifying and recording invoices. It would be best to make sure that all employees are aware of the processes in your accounting and bookkeeping systems.
Theft of Checks
It is common for employees to 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 every month. It is advised that you should review bank statements to ensure that only the checks that have been authorized are cleared.
Stealing Directly from the Cash Register
This is mostly done when the employee accepts a cash payment at the cash register who can balance the drawer later by voiding the particular transaction.
Solving this problem involves 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.
Faking Expense Accounts
This is one of the most common ways that employees steal from their employers. 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. 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 single entries’ authenticity.
Employees Punching In and Out for Coworkers
This is known as “Time Theft” and is a widespread 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 daily.
One way to solve such a problem is to adopt a biometric punch in/out system. Utilizing fingerprint or face detection for keeping track of time can help. Many businesses have already incorporated such techniques into their operations.
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.
To solve this problem, you need to integrate physical inventory checks into your routine. While doing so, keep a note of anything missing and utilize RFID tags to keep track of valuable items in the inventory.
Data Theft
The targets for this particular kind of employee theft usually records a customer’s data, which might be personal. Other data that might be considered valuable can also be stolen.
Prevent this by requiring employees to change their passwords frequently. 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 functions. Cloud storage solutions can provide such security measures for the data of your business.
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