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 2016 Report to the Nations on Occupational Fraud and Abuse:
Typical organization loses 5% of revenues in a given year as a result of fraud.
The median loss for all cases in the study was $150,000, with 23.2% of cases causing losses of $1 million or more
The median loss suffered by small organizations (those with fewer than 100 employees) was the same as that incurred by the largest organizations (those with more than 10,000 employees)
More than three-fourths of the frauds analyzed were committed by individuals working in seven key departments: accounting, operations, sales, executive/upper management, customer service, purchasing, and finance
8.4% of the victim organizations were fined as a result of the fraud
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—58.1% 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.
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.
This post was originally featured on SWBC's BusinessHub blog on July 24, 2015. Updated on April 1, 2016.