There has been a great improvement in security and surveillance strategies through recent years due to technology advances. Multi-use surveillance equipment and user-friendly designed apps are more effective in determining loopholes that give thieves more opportunity. Unfortunately, employee theft is not rare and only seems to be increasing. It is even common for losses from employee theft to be higher than outside theft. Employee theft may be difficult to detect since they are insiders and familiar with the system and might have access to keys to the workspace. Sadly, employees have used these methods for personal gain.
Methods and Motives
Accounting and finance personnel are capable of redirecting checks received to personal accounts. They can easily cover-up the theft since they maintain the ledgers. Employees can also write checks to personal accounts if they have access to the corporate checking account.
Cash can be stolen by deliberately undercounting change to customers and keeping the difference. For non-scan businesses, employees can quote a higher price for untagged merchandise and pocket the balance.
Theft of business goods and merchandise can be taken off business premises by use of garbage bins, recycling systems, or personal bags. Theft of supplies may seem petty, but this quickly accumulates when employees become more and more comfortable with taking office supplies.
Payroll theft refers to payment for unearned time when they are able to clock in earlier or later than the time they actually put in.
We can begin to prevent employee theft when we try to understand where the motivation is coming from. Some motives for individuals to risk their career and livelihood arise when they are dealing with drastic life changes, trying to live beyond their pay scale, struggling with addictions, or seeking revenge from the company.
Minimizing Employee Theft
A proactive approach is the best defense to employee theft. It is important to identify the loopholes in administrative and operational procedures. Ways to help protect your business:
- Those in positions with access to accounting and financial records should undergo high-level background checks.
- Establish a system of checks and balances for those with access to financials.
- Cash-handling assignments should be given to established employees rather than new hires.
- Always have at least two employees working together at all times.
- Voiding sales and customer refunds procedures should require approval by a supervisor or manager.
- In the bookkeeping/accounting department, ledgers should be maintained by a team of employees rather than entrusting only one person.
- Under no circumstances should a single individual be entrusted with control of all financial records.
- Use an outside accountant to examine key financial records.
- Bank statements, checks issued/received, and accounts payable and accounts receivable should be verified by a third party.
- Install a video surveillance system as a deterrent (Real-time video monitoring may be helpful in high-risk and high-value areas).
- Implement trash removal routines that could reduce the chance of business items being taken out. (flattening boxes, using clear garbage bags, and ensuring one-way access to dumpsters).
Arguably one of the most important ways to help prevent employee theft is to improve employee morale. Build trust and get to know your employees. Establishing rapport and building relationships can go a long way as happy workers are less likely to steal and are more emotionally invested in their career. Employees who are loyal to the company can also help limit losses due to fraud and theft by reporting their suspicions. Employee theft can be financially devastating, so consider securing crime insurance to protect your business.
About SB One Insurance Agency
At SB One Insurance Agency, we have served the businesses and residents of New Jersey, New York, and Pennsylvania for more than 60 years. We are a wholly-owned subsidiary of SB One Bank, the region’s premier banking institution, and we are prepared to offer you personal, business, employee benefits, and risk management solutions. To learn more about our coverage options, contact our specialists today at (888) 990-0526.