3 Easy Ways to Lower Your Risk for Employee Fraud
Employee Fraud is very real, unfortunately. It can hit companies of all sizes too, so even if you have a small business, you are not safe from fraud. While this might sound frightening, it should instead propel you to start taking actions to keep you and your business safer from all sorts of fraud. Here are three easy things that you can do to boost your level of safety. When you have a good business management mindset and you take things into your own hands, you will have more control over the situation.
The key to mitigating fraud is to break the fraud triangle.
Reduce Opportunity:
These reductions are as simple as checks and balances in any small business. Your purchasing person should not be you’re A/P clerk. The business management employee who cuts the checks should not also have signature authority. The opportunity elements are varied, so consider each job, and make sure someone else has the chance to see the work.
Reduce Motivation:
This can be harder to see, as an employee’s motivation to commit small business fraud is often related to circumstances outside the office. This can be reduced with personal relationships with employees, and a culture treating the business in a fair way. If an employee is treated in an abusive way, they may retaliate via employee fraud and theft.
Reduce Rationalization:
While transparency in business management is good, too much transparency and open book management can lead to entitled employees that rationalize all sorts of fraudulent activity. Does the bookkeeper see personal expenses charged in? This may be rationalization for unacceptable practices to become allowed here.
It’s important to know that fraudulent employees, once they have started this activity, will have a tendency to create a pattern. It gets repeated at future employers, too. Employers do not cause employee fraud, but they do need to create systems to prevent it and catch it quickly.
About the Author Barb Fisher
Barb is the CEO of Fisher Bookkeeping, an outsourced bookkeeping consultancy that provides small businesses with a full-service financial department. Her favorite aspect of work is to break down the accounting to meaningful bits, so entrepreneurs can make a powerful difference in their own business. She's also a power lifter (squat: 215, DL: 270).