You have enough to worry about without facing the possibility that one of your employees could be ripping off your business. And sadly, that happens way to often to way too many small business owners. At least once a week I read about another small business being ripped off by staff — just today it was someone who stole a half million dollars over a three year period!
That is absolutely crazy — and quite preventable.
Here’s the situation. You’re humming along and all of a sudden a discovery is made that a trusted employee has been stealing from your business for a long time. Typically this is the person who has responsibility for handling incoming receipts and paying bills. They might start out small and then the problem grows until they are eventually discovered. But by that time they’ve already stolen tons of hard earned cash from your business.
This type of theft happens to a lot of small businesses who trusted someone they shouldn’t have. And typically there are no controls in place to minimize opportunities. Here are six actions you must take to protect your cash or lose your business — NOW.
Yes, I know your niece (nephew, neighbor, friend’s husband or wife, trusted colleague, etc.) is someone who you’ve known for a good long time. They are someone you trust. But that doesn’t mean you can skip the steps to make sure they are a good fit for your business. No matter who you are hiring, you need to conduct a background check to ensure there are no surprises. And you need to conduct an interview to confirm their values are the kind you want demonstrated in your business.
Responsibilities for handling financial transactions in your business should never be assigned to just one person. You should never allow only one person to perform the task of recording and authorizing incoming and outgoing transactions. At least two people should share this responsibility. And by all means make sure that this person isn’t the only one with signature authority.
Audits should be commonplace in your business. At least once per quarter there should be a scheduled audit of your financial transactions. Plus a surprise audit on a regular basis will keep everyone on their toes too. Internal audits are fine as long as they’re not conducted by the people who process your financial transactions, but you’ll want at least one audit per year conducted by an outside party.
Your company culture should foster an environment that makes it easy for staff to raise issues if they see them. No one wants to be a tattletale and often people won’t report what they see because they are afraid of what the repercussions might be. Give them a safe and anonymous way to report things that they think are not quite right. They could save you thousands!
Require everyone in your company to take a vacation of at least a week. Often fraudsters will avoid a vacation like the plague because of their fear that their actions will be uncovered. Don’t let tasks sit idle while they are gone. That won’t help protect your business from fraud if everything is waiting for the same person when they return to work.
Trustworthy people work for trustworthy employers. If you like to bend the rules, you are implicitly giving your staff permission to do the same. Just don’t do it. Be the model they want to emulate.
You deserve to reap the benefits of your hard work and effort. Don’t let someone steal it from you.
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