There is certainly no denying the fact that businesses fear embezzlement, fraud, and theft. According to studies, embezzlement eats up a significant portion of revenue and annual profits. It restricts companies from 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 outside individuals or stakeholders in the company.
Top executives and business owners from around the globe have devised methods to protect their businesses from fraudulent activities. But, still, no one has yet come up with a magic formula to prevent the unfortunate reality completely. Employee theft and fraud are imminent. 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 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 must regularly come up with different ways to protect themselves against embezzlement. Inexperienced business owners often lack the seasoned wisdom to distinguish between their employees, especially those who are stealing. Those who have a habit of stealing are quite often clever, confident, and less concerned about losing their jobs since 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 does not mean that nothing can be done to prevent embezzlement. As a business owner, it is your duty and responsibility to maintain complete control over your finances and other important business matters. 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. Moreover, unfortunately, you must be aware of the possibility of fraudulent activities in your business.
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 to record, track, and analyze things wisely for better decision-making. In simplest terms, what is going in and out of your business must be recorded chronologically 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 protect your personal assets from fraud and gain a true picture of your business, which will further prevent embezzlement.
Create a System to Report Theft or Fraud
A reporting system needs to be carefully and preemptively incorporated into a business, as it should not signal employees or convey to them that you do not trust them. Losing the trust of your employees is hard to remedy. Therefore, you must keep all the complaints filed by your employees confidential and secure from their co-workers. This way, employees feel encouraged and safe in reporting fraudulent activities that they think might be happening. This will help you protect your business against embezzlement.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.