There is certainly no denying the fact that businesses fear embezzlement, fraud, and theft. According to studies, embezzlement consumes significant revenue and annual profits. It restricts companies from creating a high-level impact in the market, further preventing them from expanding their business operations. Statistics reveal that trusted employees steal more from businesses than outside individuals or stakeholders.
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 wisdom to distinguish between their employees, especially those stealing. Those with a habit of stealing are 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. You must know everything from bookkeeping accounts and bank statements to inventory and clients before making important business decisions. Moreover, 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 or a trusted veteran just coming into the company. 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
It is hard to manage everything manually. Creating a custom solution tailored to your business needs is more beneficial 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 assets from fraud and gain a true picture of your business, further preventing embezzlement.
Create a System to Report Theft or Fraud
A reporting system must 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.
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