By Catherine Powell
|Image courtesy Pixabay|
If you're a business owner, then you know that keeping a business profitable is an uphill battle. If it isn't things like COVID and inflation that make it difficult to keep your ship of commerce off the rocks, then it's increases in the cost of supplies and taxes that cause you to lose sleep at night. As bad as all of those things can be to your company's bottom line, there's one item that can prove far more devastating to profitability: employee theft. Like it or not, all employees don't have an employer's best interest at heart. Some of them can and will use your business to go into business for themselves, while others are interested in doing your business in. If you don't have the proper safeguards and oversight in place, you may soon find that your employees are taking your business for a ride to a place you don't want to go. Below are the top-10 ways employees can rip your business off and what you can do to keep them from rob you blind.
#1: Embezzlement - When it comes to white collar crime, nothing tops embezzlement. That's because it usually involves the very people you trust to oversee your company's bottom line. Managers can undermine your profits by skimming from the take or by setting up phony accounts payable to themselves. The trick to managing your managers can be a touchy subject, but that shouldn't deter you from making sure they're held accountable. In one for instance, when a sandwich shop in Missouri found that their manager was pocketing cash receipts, they fired him and instituted a policy that paid customers $10 if they failed to receive a receipt along with their order.
#2: It fell off the back of the truck - While management can pose a threat to any successful business, so too can low level employees who work in the back room or the stock room. It isn't unusual for businesses to find their inventory or supplies have gone missing from time to time. To keep this kind of employee theft at bay, all it usually takes is the installation of surveillance cameras in stockrooms and loading docks. If employees realize they are being monitored, it makes it difficult for supplies and inventory to go missing without the culprit being caught red handed. It also makes it that much easier to prosecute those who are looking to line their pockets at your expense.
#4: Forged Checks - While you may think that the best way for employees to get a raise is to work hard and remain committed to the bottom line, some workers find a shortcut to getting more compensation by forging company checks. Whether they steal existing checks from your desk or use the banking information provided on their paychecks to transfer money to their own account, employees can be very efficient about lining their pockets if they can access your bank account. Many times they will cover their tracks by creating phony AP accounts or even registering a DBA with a name identical to the company they work for. The way to put the kibosh on this kind of theft is to make sure you separate the tasks of processing and reconciling payments. It also wouldn't hurt to do away with paychecks by using direct deposit to pay your staff.
#5: Double Dipping - Another way for an employee to get away with theft is to get paid twice for the same expense. If your company issues credit cards to employees, make sure they don't submit an expense report as well. Also, it wouldn't hurt to verify that everything they charge to the company card is a legitimate business expense. Abusing a company expense account is an age-old method used by employees to surreptitiously increase their compensation illicitly. The best ways to stop double dipping are to carefully monitor the use of company credit cards and to insist that employees turn in receipts for every purchase, as opposed to simply relying on the credit card statements to verify transactions.
#6: Timecard Fraud - If your company requires employees to clock in and out, you could wind up paying for more time than is warranted. That's because it's possible for some employees to manipulate their timesheets by failing to properly clock in or out, or by having a friend clock them in early or out long after they've left at the end of their shift. It's even possible for an underhanded manager to create a timecard for fake employees. The way to stop timecard fraud is to position a camera that monitors the area where employees clock in and out.
#7: Is your cash box an ATM for your employees? - Another way that employees can help themselves to the till is by siphoning off cash from petty cash or night deposit bags. Even if the amounts pocketed are trivial, it can add up to thousands of dollars lost every year. The best ways to prevent employees with sticky fingers from pocketing cash is to keep petty cash under lock and key and by keeping a record of all cash deposits made by your business.
#8: Filching Returned Merchandise - Employees can go into business for themselves by taking returned merchandise home only to resell it online. If your company doesn't maintain tight control on returned merchandise, this can give light-fingered employees a way to turn your loss into their gain. Make sure you keep track of returns to stop this kind of theft.
#9: Getting a Kick out of Kickbacks - Do you know who your business is doing business with? If not, your manager can be getting a kick out of kickbacks from their friends. It isn't all that difficult for a trusted employee to work out a side deal with a vendor who agrees to give them a piece of the action. The way to stop this kind of ripoff is to choose vendors yourself instead of delegating it to your staff.
#10: Business ID Theft - It's all too easy for a trusted employee to use your company's good name to purchase goods they intend to use themselves or even take out a loan that they'll get your business to pay. Managers, accountants, and bookkeepers have been known to use their access to a company's financials to line their own pockets ever since businesses were invented. The ways around this problem are to install automated checks and balances that keep you informed of financial transactions and any new credit taken on by your firm.
Catherine Powell is the owner of A Plus All Florida Insurance in Orange Park, Florida. To find out more about saving money on all your insurance needs, check out her website at http://aplusallfloridainsuranceinc.com