8 Tips to Protect Against Embezzlement

A recent Embezzlement Study by Hiscox found embezzlement is still a very common crime, and many business owners fall victim to it every year. In fact, the median loss from employee theft was $615,101, and small businesses were at the greatest risk. If embezzlement occurs at your business, it can be a huge loss to overcome. Use these tips to protect against embezzlement:

1. Don’t Be Naive – First and foremost, be well aware that embezzlement is one of the most common white collar crimes and can happen to nearly any business – no matter how well you know and trust your employees. In fact, most cases of embezzlement happen to small businesses with less than 150 employees, and many cases of embezzlement result in hundreds of thousands of dollars of loss. It can happen to your business, and if you’re not actively working to avoid it, your business is at a big risk.
   

2. Know the Warning Signs – Not only should you be aware that embezzlement can happen to your business, you should also be constantly on the lookout for it from business partners, employees, and even family members. Know the warning signs of embezzlement and trust your gut if you think something is amiss.
   

3. Create a Segregation of Cash Duties – One of the best ways to avoid the risk of embezzlement is to create a segregation of cash duties plan. This will ensure no one person is responsible for the money at every turn, but rather many people have responsibilities to keep a system of checks and balances, which makes it much harder to steal. If your business does not have a plan in place, read more about segregation of cash and how it can protect your business here.
   

4. Use a Checking Account – Track all money that comes into and out of the business through your checking account with receipts, so you know exactly where the money is and where it’s going. Embezzlement is easy to commit when there’s not a thorough paper trail of money; it gets much harder when the money is being closely monitored.
   

5. Avoid Cash Where Possible – In certain business models, cash is inevitable. But where possible, reduce the use of cash in favor of credit cards and other trackable forms of payments. This will reduce the possibility of employees stealing large amounts of petty cash over time.
   

6. Take Inventory – While it’s common for businesses to lose money to embezzlement, employees have also been known to walk away with employee products. Do a regular and complete inventory check to make sure your products aren’t going missing.
   

7. Balance Your Books – We harp on this all the time, but it’s true. The more organized and up to date your books are, the more likely you are to spot discrepancies. Furthermore, don’t leave the books up to just one person. Make sure you, as the business owner, and others are taking a look at them on a regular basis to ensure there’s no funny business going on.
   

8. Work with an Outside Auditor – Even if you don’t suspect anything, it’s wise to work with an outside auditor on a regular basis who can check your books and help ensure you’re not losing money to embezzlement. Having a third-party, unbiased person to look over everything will deter embezzlement and help you catch anything before it gets out of control.

If you suspect your company is at risk of embezzlement or you suspect it’s already happening, please contact Tally Services, Inc. in Fort Collins. We can provide a second set of independent eyes to ensure your finances line up as they should. We will be able to spot any inconsistencies and find embezzlement if it’s happening. Our team of accounting experts will also help put systems in place that will prevent it from happening in the future. Contact us today for more information.