Sometimes business owners face employee embezzlement or at least have the fear it may occur. This kind of fraud can be even more devastating if it occurs in the first phases of business development. Employee embezzlement is the most insidious and common of all fraud attacking small businesses. According to a recent study conducted by an association of certified fraud examiner (ACFE), employee embezzlement is costly to companies, and it takes them years and years to recover from the loss. Companies with fewer than 100 employees accounted for 35% of fraud cases.
These findings bear witness to the fact that employee embezzlement can turn a business venture into a misadventure. Why? Because it drains the business’s revenues and profits that help businesses to stay in the competitive race. The literal meaning of embezzlement is taking money, property, or any valuable thing from the person to which it belonged. Companies must recognize and deal with embezzlement, fraud, theft, or any con or deception that may hurt your business and its fate. You must be aware of the warnings and take deliberate steps to prevent fraud within your organization.
Root-Cause of Employee Frauds and Threats
Increased trust in your employees, failure to appreciate new and trusted employees, poor management of finances, and lack of bookkeeping and accounting control often lead companies near to a complete shutdown point. As per the study, your trusted business partners or employees would probably steal more from you than the company’s newest employees. Why? Because they are more aware of business conduct and processes than new hires. So, there shouldn’t be anything like blind trust in business. You should always monitor your employees regardless of their experience and terms with you.
Moreover, employees’ underlying motivation is one of the biggest reasons for embezzlement, where they feel underappreciated, underpaid, and overworked. Businesses need to boost their employees’ morale by valuing their performance and potential if they expect to prevent fraudulent activities in their organizations. Trust me! Your employees can change the entire fate of an underperforming business if you appreciate their efforts and give them perks and benefits along with deserving gross salaries.
Poor management of finances and admin work can be costly to a business. It can even kick a business out of the competitive race. Employees who intend to steal from you have a sharp mindset that encourages them to devise creative ideas for stealing or theft. Being a business owner, you must prevent them from stealing and embezzlement. For which, you should leave no margin of room for your employee to take from you.
Moreover, it would help if you took management and admin control in your hands. Business books are not that hard to manage and supervise. All that it takes is your motivation to make efforts to prevent your employees from embezzling or stealing from you.
What Could Be the Warning Signs?
The list of warning signs could be limitless depending on nature, size, and business operations. However, there are sure warning signs that let you know if your employees are stealing from you.
- A change in employee working habits such as disorganized company records
- The unexpected change in record-keeping methods or systems
- Unexplained funds to buy luxury items such as expensive cars, watches, or boats
- An unusual drop in profits
- An employee takes business bills, receipts, and/or bookkeeping home without permission
- Your accountant is reluctant to hand over books and critical financial records
- Your accountant spends more time at the company than usual
- An employee with financial problems and family pressures
- An employee calls it quits from the company suddenly
Embezzlement and Prompt Prosecution
The signs of embezzlement or employee theft are endless. However, you can minimize these fraudulent activities by spending more time and remaining true to your business. You can save your failing business and keep its positive image in the market if you have processes prohibiting employees from stealing. Perhaps it may account for legal proceedings or heavy penalties under a company’s policy.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.