Embezzlement is a crime that can have huge impacts on small businesses and in the past, an act like this has even resulted in the closure of many businesses. Myself and my colleague experts as we like to think, spend a great deal of time working with small businesses in order to protect them from this heinous crime. One thing that often surprises me is the amount of small business owners who genuinely have never considered embezzlement as something which could take place in their business, the reason this is worrying is because those who are blind to it, are the most likely victims. If you want to protect your business from the risk of embezzlement, here are some ways to protect yourself.
The first step in protecting yourself from embezzlement is to be aware that it could easily happen to you. In the large majority of embezzlement cases, the perpetrator is someone who knows the owner well or as a relationship with them. As long as you are aware that this crime could easily happen to you, you can be better prepared and be able to spot the signs when they appear.
Make sure that all of your business’ dealings go through a checking account with the bank. The reason behind this is that every transaction coming into or going out of the business, will generate a receipt at the bank. This means that should someone wish to start doctoring the accounts of your business, they can only do so at a local level and once this is cross referenced with the checking account at the bank, you will be able to see where the problem lies.
You should not have the same person carrying out each step of a sale or purchase, instead you should look to use two or three people to do this. If you have the same person buying things and writing the cheques, you leave yourself open to them taking advantage of this and writing cheques to themselves. This is not to say of course that embezzlement can be avoided in this way as collusion could take place, despite this it can still act as a strong deterrent against embezzlement.
One of the best ways of avoiding embezzlement is to have regular audits at irregular times.
These audits should be a mixture of in-house audits carried out by you, as well as external auditors coming in to check out the company accounts. The reason why you need this to be irregular is so that anyone wishing to embezzle, will think twice as they will never know when the next audit may be. Good practices such as this are the perfect way to deter and hopefully avoid entirely the risk of embezzlement and it can help you to keep your business, and its accounts, safe.
This crime can be highly damaging to a small business like yours, make sure that you do not get caught out.