How To Avoid Employee Fraud/Theft
Dear Friends & Neighbors,
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Let’s continue this series on helpful hints for small businesses:
Did you know that fraud is a primary cause of business failure and about a third of the small businesses failed as a result of employee theft, fraud, or employee dishonesty (according to Better Business Bureau)? These losses due to embezzlement affect small businesses especially hard because most small businesses cannot afford to absorb such losses. This is such a pervasive problem that even The West Wing used the data (as a threat to small businesses) in the script for one of its episodes (above video). Such fraud/losses may come in the form of: cash theft, inventory theft, credit card/personal identifiable information theft, theft from customers, and theft of supplies.
To help insure the success of any businesses and avoid potential employee fraud/theft, these measures are recommended below:
- Do background checks before hiring any one.
- Get to know your staff well. The more you are aware of your staff, the more you are able to keep an eye on things.
- Communicate the seriousness of employee theft and potential consequences (failed company would translate into loss of jobs).
- Implement checks and balances, audits and inventory controls to increase your knowledge of the inner workings of your business and regularly conduct these systems of protection periodically.
To protect your business in the case of fraud, embezzlement, or theft of a customer’s property, there are two types of bonds :
- Fidelity Bonds provide coverage against loss from employee theft or embezzlement (not otherwise covered by a company’s insurance coverage). A bond may provide a blanket coverage for all employees’ actions, or may be specified to cover one or more specific employees).
- Business Services Bonds: Any business that has employees entering a customer’s premises (be it customer’s home or businesses) should have a Business Services Bond to This
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