Being the victim of embezzlement is one of the most heart-wrenching events that a business owner can endure. Usually it involves a being betrayed by a highly valued and trusted employee. Not only is it a financially damaging experience, but an emotional one as well. Owners like to think that signing the paychecks keeps this from happening, but it doesn’t.
The bad news is that there are no surefire way to prevent this, but there are things that you can do to lower the chance of it happening. The good news is that accounting can put checks and balances in place to protect you and your company.
Make sure you have a budget.
If you know what is supposed to happen then you can more easily spot discrepancies and suspicious transactions. Money has to go somewhere, if you are aware of the flow of money, you can more easily figure out when it is missing and where it has gone.
Make sure that the bank and credit card accounts are reconciled every month.
If the cash is right then it has to show up in a second place on financials. If it doesn’t, then you should be able to quickly get to the bottom of it.
Make sure you understand your financials.
If your Profit and Loss Statement is matching up to your budget, what about your Balance Sheet? Are there accounts that you don’t understand on it? An unscrupulous employee could be use that account to steal money.
Watch your employees’ for warning signs. Warning signs include:
- Talking about purchases that seem unaffordable. Purchase of cars, vacations, stuff for their kids are at the top of the list.
- Visiting casinos can be a real red flag. Many embezzlers try to replace stolen money with winnings. (It doesn’t work.)
- Never taking off work. Embezzlers don’t want to take the chance that someone will figure out what they are doing.
- Embezzlers don’t look like crooks, they are people you trusted and hired. Many started out as a simple borrowing and then it gets out of hand.
The quicker that you can identify that someone is embezzling, the quicker you will be able to staunch the bleeding. If you have any concerns, perform a thorough examination of your books.If you have concerns that your accountant might be embezzling, hire a neutral third party to examine your books.
At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information: