Embezzlement is an awful crime which has blighted the business world for many years and in some cases it has caused entire businesses to collapse. This crime is defined as the “theft or misappropriation of funds which have been placed in one’s trust or belonging to one’s employer” and which ever way you slice the problem, it is theft that can have a damning impact on your businesses. As a small business owner, you are at risk from a great many factors, market changes, customer trends, being trampled on by competitors and unfortunately, you are at risk from in-house problems such as the crime of embezzlement. We spoke to Steve Sorensen embezzlement professional on how your small business can avoid this terrible situation.
The first step in terms of avoiding embezzlement is to be aware that this is something very real and something that could very easily happen to you. Sadly, if you look at the majority of cases of embezzlement, they are committed by trusted and respected people within the business, many of whom have been lifelong friends of the owner. If you are aware that this is something that could easily take place on your watch, you are going to be on alert for anything that looks odd or different and you could find a culprit before it is too late.
Make sure that you do not have the same person making sales, approving funds and writing checks as this can leave you wide open to theft. Having an employee who has all of these responsibilities also dangles temptation in front of their face and whilst they would say that they could never do such a thing, when times get hard, people will take any opportunity that they can.
All of the money that comes in to your company should go through a checking account where it can be receipted. The reason for this is that the bank are the people who control these statistics and receipts and whilst the books within the business can be altered to reflect something different from the truth, the banks records can not and so you will be able to spot any foul play in an instant.
You should have your books audited regularly by an external auditing company so that you can always make sure that things look right. Using an external company for this can reduce the risk of collusion and having regular audits will also make anyone think twice about cooking the books. Make sure that you do not have audits with too much regularity i.e. the same time of year or even the same date as this can be planned for by anyone looking to commit this crime. Aside from helping to reduce embezzlement, auditing your books is also very good practice for any business owner.