No one wants to think that their employees would try to steal money or defraud their company in some way.
But it happens. Unlike in very large companies where employee fraud might result in prosecution or newspaper headlines, employee theft in small or medium-sized businesses is largely unreported and often just a loss for owners.
The number of fraud cases and the amount of fraud losses is growing in the United States and around the world. The biggest factor that puts smaller or mid-sized companies at risk is that because of fewer employees, too many financial-related duties are in the hands of one person, making it easier to steal money without anyone noticing.
Most of the frauds we see in smaller businesses are pretty basic. For example, someone who processes accounts payable checks will make a check out to themselves, but record it in the accounting system as going to a company vendor. That person may forge the owner’s signature on the check, or simply have a signature stamp, making it even easier. If this person is also the one who reviews the monthly bank statements of cancelled checks, no one ever notices the discrepancy.
Studies have shown that most frauds have a duration of about 18 months before being discovered. Typically, an insurance company might cover a loss from employee theft, but insurance might require you to prosecute the employee first. Or you may have a high deductible. The best way to stop loss is to prevent it.