Protect Your Business from Dishonest Employees

Chances are you, or someone you know, has or will become a victim of a dishonest employee.

While locking the doors of our business, our home and our car is second nature, we often fail to recognize the assets of our business also require protection.

Employees may steal from a small business in many ways including:

  • Intercepting A/R checks for personal gain
  • Creating false invoices to pay bogus companies and friends with your money
  • Operating their own business inside yours during working hours
  • Destroying valid A/P invoices to hide their crimes
  • Falsifying reimbursement claims
  • Abusing company credit cards and resources
  • Redirecting legitimate business opportunities to others for personal gain
  • Shorting your inventory of materials and supplies
  • Walking away with intellectual property, trade secrets or customer data

Many, if not all, employee thefts can be prevented when you have proper procedures in place and they are followed. 

  1. Conduct background and reference checks on all new hires who will have access to company finances. If an individual was caught stealing at a prior job, they could become an applicant in your lobby.
  2. Set high ethical expectations and lead by example. 
  3. Your employee handbook must state your company policies and procedures and make clear the punishment for not following the rules. 
  4. Review reimbursement claims. It’s also a good way to catch math errors.
  5. Incoming checks should be logged and then reconciled by a second person. Segregation of duties across all financial functions is essential to prevent theft.
  6. The person who approves payables should not write the checks.
  7. Check signing authority should be limited to the top two or three company officials.
  8. Limit access to sensitive company data to only those with a need to know.
  9. Make sure your employees utilize and take their allotted vacation/PTO time each year. Not only is it healthy for your employee, but it will likely expose any fraudulent activities should they exist in your business.
  10. Perhaps the most effective way to monitor your business and engage employees is the Management By Wandering Around (MBWA) philosophy introduced by Peters and Waterman in their book, “In Search of Excellence.”