Embezzlement is the theft or misappropriation of funds placed in one’s custody. In other words, it is stealing something from an organization that is not yours. Regardless of the scale or magnitude of a business, embezzlement of funds exists in almost every organization. Therefore, you must come up with a prevention plan before embezzlement drains your small business.
Employee fraud and embezzlement can occur in any organization. Small businesses often lack experience and knowledge, which prevents them from having the right checks and balances in place. According to studies, businesses lose approximately 8% of their annual revenues from theft and embezzlement, making it the biggest reason why most start-ups fail to create an impact and generate revenue. Employees can make or break a business; they have the potential to take a business to the top or break it apart to pieces. Employees can determine the fate of a company and its long-term survival.
Employee embezzlement can drain your small business of finances and resources, perhaps costing you everything within a short amount of time. The portion of assets than an employee steals each month will eventually accumulate to a considerable amount, leading a business towards its gradual demise. Stealing from an employer raises serious moral and ethical concerns; it is not a legal activity under any circumstance. Moreover, it may lead one to face severe repercussions, including lawsuits and jail time.
Embezzlers can often get away with their actions because they steal at a suitable time of their own choosing. They know the processes of their organization and have a clear understanding of how to steal without getting caught. However, with increased technology and advanced accounting software, you now have options to prevent maximum theft in your company. Below are suggestions on how to stop embezzlement before it drains your small business.
Look For Financial Discrepancies
An unusual fall in profits or a squeezing profitability index are symptoms of embezzlement. By implementing an advanced system and maintaining it, you can prevent embezzlement or data breaches. In doing this, you will get to know your profit shortfalls and even catch culprits for further disciplinary actions.
Regularly Check Company Records
No matter how much trust your accountant, you should always regularly check your financial records to obtain a clear picture of your company’s financial health. Any discrepancies found in the records should be addressed wisely. Financial records and bookkeeping reveal the true status of a company’s financial status.
Respond to Client Complaints
Responding to client complaints is one of the simplest ways to determine if embezzlement is occurring in your organization. Clients often complain when their order is not dispatched properly or does not meet their expectations. Therefore, if you start to receive a lot of complaints, it is wise to investigate the matter. Deeper research and consideration may reveal if something suspicious is happening within the organization.
Notice Employee Habits and Behavior
Pay attention to any significant changes in the habits and behaviors of your employees. To stop embezzlement before it drains your business, you need to develop a mechanism that may discourage employees from participating in malicious and unethical deeds.
Leverage Control over Financial Decisions
In the core of every successful business lies well-established and ethical teamwork. You cannot expect to succeed all alone. You need to empower your team to help with the prevention of fraudulent activities. Although most organizations are affected by this disease, you need to develop suitable preventive measures to stop and save your organization from embezzlement.
Leverage control over your organization’s finances to establish your leadership over all aspects of your business, especially related to financial decision-making. Preventing and stopping embezzlement in it is tracks is extremely important to winning the competitive business race.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.