Employee fraud and theft are certainly a big concern for small businesses. Most owners don’t realize the impact a fraud could bring to their business and don’t believe it until they face the curse themselves. Small businesses have every reason to worry about fraudulent activities in their company. It can hamper and disrupt their working capital and, most importantly, their cash flow.
Undoubtedly, small businesses are more vulnerable to employee fraud, theft, stealing, larceny, robbery, and embezzlement – whatever you name it – because of ill-defined practices and processes and lack of business control. This indicates that a lack of accounting knowledge, wisdom, and business management skills may land you in real trouble.
Employee theft and fraud can lead to lethal repercussions—are you protected?
There is certainly no denying the fact that employee fraud can devastate your business. No matter how successful your entrepreneurial venture may be, a slight miscalculation in finances or wrongful business projections can devastatingly hurt your business. According to studies, US-based companies suffer a staggering $150 billion loss in fraudulent employee activities every year, out of which 83% of theft happens to be in small businesses.
Another trend that has been identified by the ACFE (Association of Certified Fraud Examiners) is that small businesses with fewer than 100 employees are more vulnerable to employee fraud which can even kick the company out of the competitive race. Why? Because of two core reasons; a greater degree of misplaced trust and a lack of basic accounting controls.
If small business owners expect to stay competitive, they need to develop effective and implementable loss prevention strategies to get their business going in full swing. Often, those who steal from you are typically suspected least in the company because of their well-established trust and faith.
What should you watch for?
In today’s era, catching culprits does not have to be that hard. We have superior technology and practices that can help us prevent organizational losses and discourage fraudulent activities such as employee fraud. Blind trust can lead you to a complete failure or utter disaster. You need to track and monitor daily business operations and activities, especially the influx or outflow of cash flow yourself, to keep things going in the right direction. The fear of losing cash and assets can cause anxiety and mental stress, which can be troubling for your health and business.
Any significant behavioral changes in employee attitude, working abilities, or spending habits can be warning signs of the possibility of some employee fraud. Sometimes, financial stress and pressure at home can also lead an employee to commit theft or fraud. Moreover, your employees living beyond their financial means can also raise suspicion, which needs to be investigated. Pure blind trust is a story of the past. No matter how much trust you may have in your employees, you need to ensure that they are not stealing from you or committing fraud.
Ways to protect your organization from employee fraud
Creating a written fraud or theft policy can help prevent employee fraud. This way, employees will know what fraud means to the company and the repercussions if someone from the company is involved in any fraudulent behavior or activity. To set a precedent, you need to establish a code of conduct with a zero-tolerance policy to discourage such illegal activities.
It would be best if you had bookkeeping and accounting control so that you could make better business assumptions and decisions. If you have hired internal and external tasks of the business, you need to conduct an audit regularly to know your business’s actual financial conditions.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 platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO 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.