Starting and running a business is a major challenge. It requires time, effort, and financial investment, often putting personal assets at risk. So, discovering that an employee may be stealing from your company can be devastating.
How to Identify Employee Theft
There are warning signs that may indicate internal fraud. Here are some red flags to watch for:
- Unusually high living standards that exceed their salary.
- Drug or alcohol abuse leading to financial instability.
- Unusual eagerness to stay late or arrive early.
- Lost or missing company documents.
- Declining profit margins.
- Failure to follow financial procedures or inventory management protocols.
- Discrepancies in financial records or stock levels.
Prevention Strategies for Business Owners
To reduce the risk of internal theft, consider implementing the following security measures:
- Background Checks – Before hiring employees, especially those handling finances, conduct criminal background screenings.
- Strong Workplace Relationships – Building trust and open communication makes it harder for employees to commit fraud.
- Security Systems – Install surveillance cameras and conduct regular inventory checks.
- Restricted Access – Change passwords and security codes after an employee leaves.
- Financial Controls – Use numbered purchase orders and verify all incoming goods.
- Separation of Duties – Ensure different people handle payments, purchasing, and inventory.
- Sales Balancing – Have someone not directly involved in sales review sales receipts.
- Surprise Audits – Conduct random audits to detect irregularities.
Protect Your Business with Insurance
Lastly, consider adding an Employee Dishonesty Insurance Policy, which covers financial losses from employee theft, forgery, credit card fraud, or embezzlement.
If you’re looking for business insurance to protect your company, contact Univista Insurance today.
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