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4 Ways to Minimize Employee Fraud and Theft


Unfortunately, we live in a world where businesses, and people in general, have to be prepared for the possibility of a robbery or theft. For a business owner, it can be hard to think about your trusted employees engaging in dishonest or fraudulent activities that could harm your company, but the fact of the matter is, it happens more often than you think. Here are some of the cold hard facts from the 2014 Report to the Nations on Occupational Fraud and Abuse:

  • Employee-perpetrated fraud accounts for a global loss of $3.7 trillion annually

  • It can take, on average, 18 months before a business detects employee-related fraud

  • One in 40 employees was apprehended for theft from their employer in 2012

  • Employees in sales, financial roles, management, and customer service were responsible for 77% of fraud cases

  • 43% of business losses were attributed to employee theft

As you can see, internal fraud does occur, and when it does, businesses are impacted in a big way, right at their bottom line. To add insult to injury, often times—58% of the time, to be exact—victims of fraud do not recoup their losses. While it may be impossible to completely avoid hiring a bad apple or an outside burglar from stealing cash or inventory from your business, there are ways that you can help minimize the threat crime may have on your business:

1. Minimize On-Site Cash

If your business requires cash to operate, try to keep the amount you have on-hand to a minimum by making regular bank deposits. Bonus tip: make your deposits at random times each day. You do not want a would-be robber to see that you routinely leave for the bank with an envelope of cash. 

2. Verify Receipts

It may be tedious, but take the time to regularly verify that the amount of cash you are depositing is consistent with receipts. You want to ensure the money your customers are paying is going into your bank account and not a dishonest employee's pockets.  

3. Perform Background Checks on Employees

Speaking of employees, perform a background check on every candidate before you hire them. While it may be impossible to get a complete picture of a person's character from a background check, it can help to reduce the risk of employee-related theft.

Related Topic: What Every Employer Needs to Know About Criminal Background Checks.

4. Train Your Employees

Properly train your employees on how to handle cash, how to open and close the cash register, and process inventory. In addition, make it clear that you have a zero-tolerance policy for employee theft in any form.  

As a business owner, you have a lot of responsibilities to juggle, and it's unfortunate that preventing theft has to be added to the list. However, with some effort, diligence, and proper risk management, you can protect your business from fraud and theft—from the inside out.

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