Embezzlement is a type of fraud where an employee abuses a position of trust to steal from his or her employer.Stealing large sums of money is possible without raising suspicion.A lot of the business's most dedicated employees are also swindlers.There are a number of actions you can take if you suspect that someone is draining your business.
Step 1: Unexplained profit shortfalls should be looked for.
There are unusual drops in profits.If you have experience in your industry, you should be able to tell if your business is profitable.If it is not, you could be in trouble with the law.If your holiday profits have been average this year, you should investigate why.
Step 2: You can look through your company's records.
Every now and then, you should check your company's financial records to make sure everything is in order.The records are disorganized and may be signs of swindling.It is important that your company's records are easy to understand.If you don't know what you're looking at, an employee could be trying to trick you.There are missing or late documents.If you can't find bank reconciliations or other important documents, that could be a sign that the employee is stealing.Accounting procedures have changed.You should be alert to sudden changes if you kept your financial records the same way.If your employee changes how he does his job, you should ask why.Multiple payments are made to the same person.A fake account may have been set up by the employee.
Step 3: If you have a complaint or tip, respond to it.
People might complain that they have paid their bills.This could be a sign of swindling if someone is being billed multiple times.Vendors might complain about late payments.Vendors should be paid quickly.An employee may be stealing money if bills are late.Listen to your employees.Someone might see a colleague pocketing inventory or money.You should not dismiss employee tips.A customer might notice that an employee took the payment instead of ringing up the sale and issuing a receipt.Ask the employee about the transaction and follow up on the tip.
Step 4: There are changes in the behavior of employees.
Pay attention to your employees.Changes in an employee's lifestyle are indicative of theft.You might notice that an employee's standard of living has gone up.The employee might have spent a lot of money.If an employee starts living in a way that is inexplicable based on his salary, then this is a warning sign.An employee's attitude may suddenly change.An employee who is easy to work with can become evasive.He is stealing from the business by changing his attitude.Sometimes disengaged workers become dedicated employees who never miss work or ask for help.The change in behavior is due to the employee covering their tracks.An employee may insist on working late or not taking vacations.The employee is afraid that others will uncover the fraud if he is gone.
Step 5: Employee defensiveness is noted.
If you want to know why documents are missing, pay attention to how the employee responds.Someone who becomes defensive or annoyed could be committing a crime.An employee who criticizes other employees is a risk.They might be trying to shift the focus to others.
Step 6: Ignore risk-taking behavior.
You might think that what your employees do on their own time is up to them.This is true in a way.Employees may engage in behavior that indicates swindling.Gambling is a risk-taking behavior.Someone who gambles to an extent that endangers their finances could be at risk of swindling money to cover their losses.Pay attention to employees who spend a lot of money on lottery trips to Las Vegas or Atlantic City.Discussing exploits.A loud risk-taker can help themselves to funds by taking risks.Any employee in a position of authority who brags about their exploits should be monitored.Drinking and partying too much.Employees who party and socialize with questionable characters are at risk of embezzling.They may be using company money to fund fun nights out.
Step 7: Pay attention to medical emergencies.
Employees who need to cover medical expenses are the ones who steal.If an employee has suffered a tragedy such as a sick family member or a house destroyed by fire, note them.The person is at an increased risk of committing a crime.An employee who has a sick child is not automatically stealing.You should not accuse anyone without proof.To confirm that the person is not taking money, you should investigate.Go through the company's books carefully.
Step 8: Personal open account statements.
It is possible that you will delegate financial responsibility to your employees.You should read your business's account statements.Bank statements should be sent to your home.You can review the statements for suspicious activity.You could see forged check signatures, missing check numbers, or duplicate payments.It looks like an accident, but it may be intentional.Money could be sent to someone on the outside at regular intervals if the employee is working with someone else.
Step 9: Look at checking accounts.
Review your business account balances and transaction histories more frequently when you review your bank statements.Check kiting is a scheme in which a person writes himself or herself a large check from a business account.In order to prevent that check from bouncing, the embezzler writes another check to that account from a second business account.If the first check clears and the second check bounces, the embezzler can disappear with a large amount of money.
Step 10: Checks should be examined.
Copies of company checks should be included in your bank statement.Don't sign signatures that look like forgeries.Look for duplicate check numbers.The first check might go to the rightful payee if there are duplicate numbers.
Step 11: Track payments for employees.
Stealing is known as "lapping."When a customer's payment is stolen, the difference is made up with funds from another customer.The differences from later payments must be made up.The scheme can go on indefinitely, and each customer payment will appear to have been received later than it actually was.To prevent lapping, communicate with your customers when they made their payments.If you notice that your bookkeeper is posting late payments, they may be engaged in a lapping scheme.Dividing the duties of handling cash and posting payments to customer accounts between two different employees can help prevent this scheme.
Step 12: All refunds need to be reviewed.
Embezzlers can make fake refunds.The fake record that the customer returned some merchandise or overpaid his or her bill was created by the embezzler.The money is "refunded" by the embezzler.Analyze employees who issue a lot of refunds.You can set up a meeting with the employee to discuss the high number of refunds.When customers get a refund, try to get them to sign something.The signature the person forges could be used to deter them from committing the crime in the first place.Employees who issue refunds without a signature could be monitored.
Step 13: The responsibilities of the employee should be divided.
One employee can steal from the business if he or she handles all of the finances.A person who does all of the billing, collecting, disbursing, banking, and record-keeping for the business is likely to steal from you.The bookkeeper can divert assets and the means to cover up the theft by altering the business's transaction records.It is possible to make it more difficult by dividing responsibilities.You could require one employee to keep records and another to sign checks.Some of those responsibilities can be taken over by you.
Step 14: Make employees work together.
Employees who work alone have more opportunities to steal business assets.If a task must be done away from the office or if no one else is around, assign two employees to do it together.It is less likely that an employee will steal from the business if they are monitored.Two employees should open and close the office at the same time each day.No single employee is alone with the cash, merchandise, or business records before or after business hours.
Step 15: Comply with mandatory vacations.
Bookkeepers are often involved in long-term schemes in which they must continually manipulate the business records to cover their tracks.Employees who cannot afford to let anyone else scrutinize their work refuse to take sick days or vacations.He or she may refuse to assign work to other people.Require your employees to use their vacation days, and have another employee handle the absent employee's responsibilities.
Step 16: Business practices should be honest.
There is a culture of dishonesty within a business.If employees believe the business treats them unfairly or deals unethically with others, they may be more likely to steal.You should create a culture of openness, vigilance, honesty, and integrity.Hold your business to high standards.You need to say that you have zero tolerance for fraud.Those who are dishonest or engage in theft will be punished.You are signaling to other employees that they are free to steal if you let small violations pass without a warning.If you want to encourage honest reporting of violations, you should create a whistle blower policy.Employees will be told that they can report suspected fraud without fear of reprisal.If you intend to handle the situation internally or involve law enforcement, make sure you know how to report it.
Step 17: An employee assistance program can be created.
An employee assistance program can help reduce theft.These programs give employees a place to talk about their problems with addiction, gambling, or their health.Employees should be able to call a hotline at any time of the day.An employee assistance program can help employees address addiction, gambling, or other problems.