No one cares about your business more than you. Of course, that will not stop you from trying to find employees that care just as much as you. It is possible to find high quality employees who will serve your business with integrity. But, the harsh reality is that you will likely end up with an employee who takes advantage of you and your business. Unfortunately, if you stay in business long enough, you may also become the victim of employee fraud.
What is employee fraud?
Employee fraud occurs when an employee steals from their place of employment. It can occur at any level and includes more than the outright theft of money. Employees can commit fraud by falsely reporting hours worked or commissions earned. The employee gets paid for the hours or commissions without having earned that money.
Fraud can also occur when an employee claims expenses or uses the company credit card on personal items. For example, when an employee uses the company gas card to fill up their spouse’s vehicle it is employee fraud. Another example is claiming a meal is business related when it is actually personal.
Theft of information is another type of employee fraud. This can occur in a few different ways. An employee that shares information, trade secrets, or client lists with competitors is committing fraud.
What leads to employee fraud?
There are some people who set out to intentionally commit employee fraud and steal from the company where they work. This type of employee will likely find a variety of ways to take money from your business for personal gain.
For other people, the steps that lead to employee fraud are more subtle and they find ways to justify their actions. The theft of time can become a negative part of the culture of your company if it is left unchecked. When one person falsely reports time worked and does not experience consequences, it can lead to others to feel like they can get away with doing the same.
Another attitude that can lead to employees justifying fraudulent actions is that misreporting expenses or misusing the company credit card will not have a major impact on the company. In addition, employees may feel like they deserve something extra because they work so hard for the company.
How can you protect your business from employee fraud?
No matter what reason an employee has for committing fraud, it is still fraud at the end of the day. If you suspect there is employee fraud occurring, you must address it to avoid long term negative consequences to your company.
The first way to guard your business against employee fraud is to have a rigorous hiring process. Take the time to call and talk to each reference and verify all of the information that any potential hire provides. A little extra time during the hiring process can save you a large amount of time and energy later.
In addition, you can develop a system of checks and balances to help you catch fraud. Make sure that you are up to date with your accounting duties so you can quickly identify anything that does not add up. You can also require that employees turn in receipts and justify all expenses before getting reimbursed.
It is unfortunate that you must spend time and energy protecting your business from employee fraud but it is a harsh reality of owning your own business. There are safeguards that you can put in place but nothing can protect you 100% against employee fraud. Do what you can but do not allow the possibility of employee fraud to distract you from your main job of running and growing your business.