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10 strategies to combat employee fraud and theft in Fort Lauderdale

One of the leading challenges for small business owners in the United States is employee theft.

The National Federation of Independent Business (NFIB) estimates that 44 percent of losses in stores attributed to theft are by employees while employees are 15 times more likely to steal from an employer compared to a non-employee.

According to the U.S. Department of Commerce, employee theft or fraud contributes to a third of known business failures. The trend points to a clear source of concern for business owners.

Activities related to employee theft and fraud include larceny, skimming, fraudulent disbursement of funds, embezzlement of inventory or raw materials, and stealing of business opportunities. The rampancy of fraudulent and theft activities has companies that offer insurance to the small business encouraging them to be more vigilant to curb the losses.

It is posited that employees engaging in fraud and theft activities usually have been at the business for longer periods usually several years. Upon starting the theft and fraud, these employees do continue with such activities for averagely about three years before they get discovered.

This time frame explains why businesses incur huge losses by the time they discover the problem. You are advised to consider Private Investigator Fort Lauderdale for professional help. 

This post discusses some of the strategies a business can implement to curb theft and fraudulent activities:

Understand your employee

Familiarize yourself with your employees and their work ethic. That makes it easier for you to know when things take a turn for the worst. Armed with the knowledge of your employees individually and collectively, you can notice changes and key indicators to potential theft and fraud.

These indicators vary but can be stopped because they either stand out or are suspicious. For instance, sudden and apparent devotion like working late can be suspicious. Sudden changes in lifestyle or living lifestyles above salary levels is also another indicator.

Other activities can be alcohol and drug abuse, resistance to procedural changes especially relating to supply, inventory, or finances, moonlighting with materials that are available at the small business, and compulsive behavior of persistent borrowing, gambling, and writing bad checks.

One way recommended by NFIM to knowing your employees is doing background checks. Furthermore, checking with the references helps to vet employees. This vetting is especially important for employees entrusted with sensitive department’s life finances.

Closely supervise your employees

Lax supervision allows for increased theft and fraud activities. That is why it is important to check your employees’ activities. If possible, you can have more than one individual to oversee the employees. That should be the case particularly for employees directly handling your money.

Utilize purchase orders

The purchase orders should be handled and processed by different individuals. That means that the preparation, payments, and receipts of payment orders are done separately and not by the same individuals. The purchase orders that are serially pre-numbered enable you to easily verify all incoming orders.

Have control over your cash receipts.

That is achievable using pre-numbered sales slips that make it easier for you to do weekly audits. You can do some auditing by balancing the sales slips and the registered receipts by yourself of a third party you trust.

Informal audits

Informal audits entail unannounced internal audits and annual audits conducted by an outside firm.

Put up computer security

You should understand computer hardware and software. The knowledge of these systems can help you identify fraudulent and theft activities going on at the business. Putting up security measures can entail restricting access to records and computer terminals as well as regularly changing entry codes. Make sure to also regularly check if the security measures in place are effective.

Tracking business checks

Tracking business checks is effective when the businesses use pre-numbered checks whose payees and amount details are done with permanent ink. Financial software, like QuickBooks, can be used to produce all checks. When not in use the blank checks and signature machines should be kept in a secure place.

Inventory management and use of security systems

Separation of roles like shipping, stock keeping, and receiving orders can help with inventory management. Annual inventories should be done by third parties. You can also use security devices to monitor inventory, merchandise, and other activities at the store.

Monitor accounts receivable

One way to do this is by separating the mail opening and postage functions. Appropriate registers should be used for cash and checks records with stamp checks employed in deposits.

Open avenues for employees to report fraudulent and theft activities

Such avenues need to be carefully prepared and managed to avoid misinformation and misuse from untrustworthy employees. That way they can be more effective and beneficial to the business. With such avenues, Small Business Legal Center attorneys advise careful handling of suspected problems.

One way to do that is extreme care when leveling accusations and conducting subsequent investigations to avoid lawsuits. All suspicions should be verified through investigation. Armed with the right information after an investigation of an accusation, you can proceed to single out the employee responsible and take the right action.

That can be employee termination followed by the appropriate legal action if necessary. For more complex issues, legal counsel should be involved as well as investigators and forensic accountants.


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