Are Your Employees Stealing?
Source: Heide Olson, All In One Accounting, Inc.
Last week, a woman who kept the books at an Apple Valley car wash was accused of swindling $350,000. Prosecutors claim she wrote excess payroll checks to herself for more than five years before being discovered by the business owner.
Studies suggest the amount stolen annually from U.S. businesses by employees is fifty billion dollars! What’s worse is that in virtually all affected organizations, the culprit is one of the highest ranking, most trusted employees.
Here’s how they do it –
- Issuing checks to themselves then deleting the paper trail.
- Transferring money from one account to another to cover up payments.
- Creating fraudulent vendor purchases and then pocketing the cash.
- Submitting bogus expense receipts and using the corporate card for personal items.
Prevention is key. No matter the size of your company, start with these fundamental principles:
Know your employees. Debt, divorce, drugs and disgruntlement are the major causes of fraud and unfortunately even the most well-dressed, properly educated employees face these pressures. Stay in contact with your employees, watch for signs and have a plan to address concerns before they erupt.
Separate financial duties. Make sure there is more than one person in charge of your accounting. If the same person who enters payroll also cuts checks and balances the bank statement, you might as well be writing a blank check to your bookkeeper.
Stay close to the dollar. Look at your bank statements. Have them sent to your home if necessary and make sure you’re the one who opens and reviews statements. Sign all checks personally. Payroll is one of the most often abused systems, so be sure you know exactly who is getting paid and how much.
Institute checks and balances. Hire an external resource to come in and conduct a month-end and bank reconciliation. By using a third party to close your books each month, you can prevent hundreds of thousands of dollars of theft.
About Scale Finance
Scale Finance LLC (www.scalefinance.com) provides contract CFO services, Controller solutions, and support in raising capital, or executing M&A transactions, to entrepreneurial companies. The firm specializes in cost-effective financial reporting, budgeting & forecasting, implementing controls, complex modeling, business valuations, and other financial management, and provides strategic help for companies raising growth capital or considering M&A/recapitalization opportunities. Most of the firm’s clients are growing technology, healthcare, business services, consumer, and industrial companies at various stages of development from start-up to tens of millions in annual revenue. Scale Finance LLC has offices throughout the southeast including Charlotte, Raleigh/Durham, Greensboro, Wilmington, Washington D.C. and South Florida with a team of more than 30 professionals serving more than 100 companies throughout the region.
