Embezzlement costs American businesses an estimated $50 billion per year, and it can occur at any business, regardless of size or industry. This article will explore the options businesses today have to prevent employee embezzlement.
Thorough Screenings
Business owners can reduce this crime by thoroughly vetting their potential hires. The screening process should involve an in-depth background check for activities like check fraud, credit card fraud, and theft. This review should also include reviewing the applicant’s credit and employment record and calling and verifying professional referrals.
Routine Audits
Businesses should also conduct routine audits to prevent employee embezzlement. Routine and surprise audits can help ensure the business’s books match accounts receivable, expenses, and inventory. They also verify who accessed the business’s petty cash, bank accounts, and other financial details.
Internal Controls
Business owners can additionally implement internal controls, such as separating duties among the employees and making sure no one person has access to or control over financial transactions and accounts. This measure can provide some oversight for your staff and also help your workers monitor themselves without the constant need for your supervision.
Transparent Work Culture
You should also foster a culture of transparency in your business. When employees know you expect them to remain transparent in what they do each day and for what they are responsible for, you reduce the temptation for them to engage in criminal behavior like embezzlement. Likewise, when you demonstrate transparent behavior, your staff are more prone to follow suit.
Create a Well-written Fraud Policy
Ensure your employees know your company’s fraud policy and what will happen if they embezzle from you. Stipulate in this policy what they can and cannot do regarding handling financial transactions. Also, make your expectations of them clear. When they know the rules, they have less excuse to justify their actions if they do embezzle from your company.
Follow Through with Legal Action
You must also follow through with legal action if you catch an employee stealing money from your business. You should hire a legal team to investigate the embezzlement for you. You should then file the necessary charges and hold the person accountable. You can also ask the court to award you damages by having the employee pay you back in full, along with punitive damages.
Create a Tip Hotline
Depending on the size of your business, you can create a tip hotline for employees to call to report this crime. You can also provide a reward to incentivize reporting workers who steal from your business. Having the hotline in place could also serve as a deterrent for any worker who might entertain the idea of embezzling money from your company.
These measures are a few you can take to prevent employee embezzlement. They, along with having a solid legal team on your side, could spare you the financial ramifications of this crime and protect the future and profitability of your business.
Disclaimer: This content is for informational purposes only and is not intended as financial advice, nor does it replace professional financial advice, investment advice, or any other type of advice. You should seek the advice of a qualified financial advisor or other professional before making any financial decisions.
Published by: Annie P.
