Employee Theft Rises as Economy Falls
Just when small business owners think things cannot get worse in this economic downturn, many are learning another harsh reality: when economic conditions turn bad, employee theft and fraud increase.Certainly the economic downturn has sparked a renewed sense of responsibility in many people who are grateful to have a job and who want to perform their jobs to the best of their abilities. But the ugly flip-side is that the poor economy has also widened small businesses’ vulnerability to employee theft, fraud, and embezzlement. Employee theft strikes small businesses at an alarming rate even in the best of times, but in challenging times like these, it can sink a struggling business in the wink of an eye. Scariest of all is that you could be experiencing serious internal theft problems in your own business and not even know it if you automatically assume that your profitability is down entirely due to current economic forces.
Here are some tips that could help reduce the risk:• Formalize procedures. Address all employees handling financials and inventory and all circumstances where that takes place. Make certain that every involved employee knows his role and responsibilities, and have them read and sign the procedures.
• Install camera systems to keep an eye on inventory, cash, and other assets. Know your areas of vulnerability and target them.
• Include basic checks and balances. If one person creates the payroll, have a different person sign the checks. If there’s only one bookkeeper, then guess what – yes, the owner needs to be that other person.
• Check criminal histories on all employees who you plan to handle financials and inventory.
• Review bank statements and financial reconciliations regularly, without exception.
• Install access control to limit certain employees to certain areas at certain times. These system also come with time stamps so you may monitor the comings and goings of your employees.
• Have your burglar alarm system notify you when your business security is armed and disarmed, keeping you in the loop when employees enter the workplace after hours.