Employee Fraud: Protecting Your Bottom Line

Can you recognize an embezzler just by looking at someone? If you could, the networks might be willing to go into development to chronicle your success. An embezzler doesnt skim off the top (what is that anyway?) They take from where it hurts, the bottom line - your profit. Most people who steal from you look like the boy or girl next door; thats part of the reason they are so successful. Im sure they dont have an association of embezzlers but if they did they could boast about how easy it is and how ripe we, the trusting employers, are for it, unless we have certain safeguards in place. Its so simple to protect yourself that if you ever do suffer employee fraud youd say, "I knew that," and you did.

These types of losses are rarely recovered even if the perpetrator is caught. I hear horror stories almost every day. In the three years I have worked in construction office management, I personally have known four contractors who have suffered losses ranging from $11,000 to over $40,000, all from "trusted employees". Sometimes these losses caused the company to go under.

Some years ago, I heard about an irrigation supply wholesaler who almost went out of business. The company was embezzled out of $500,000. Recently, I heard of another company who lost over $250,000 to employee fraud. In some cases, the work relationship had developed into bonds that felt like family members. Its the worst kind of betrayal on many levels.

Preventing losses starts with you. Its your business. Yes, you dont have any time and you are already wearing so many hats you wonder if you have another head, but when the money is gone you will have plenty of time to think of all the things you could have or should have done.

Each year businesses lose approximately $40 billion to employee theft, according to the U.S.

With competition so intense and profit so small there is a greater opportunity for losses through fraud and embezzlement. Less emphasis is being placed on preventative measures and appropriate operational controls since more and more business functions reside on computers and less on paper systems and control programs.

With the rise of credit and other debt, financial burdens on employees are increasing faster that real income, creating more incentive and more desperation. Its easier to rationalize this act if your back is against the wall and the wolves are at the door. It doesnt help if your boss just bought a new Porsche on his way back from skiing in the Alps and hasnt given his staff a raise because "things are tight."

Many small companies find employee theft prevalent in their office. High employee turnover rates increase losses due to inadequate training and lack of experience. How many bookkeepers have you had recently?

Are you doing all these things already? Good - then you have nothing to worry about, except getting more projects and keeping the customers happy.