Do SMBs need to worry about embezzlement?
Well, consider the following scenario.
Arriving at the shop one sunny Monday morning, you see a shiny new Mercedes SL in your accounting manager’s parking space. While you know that position doesn’t pay SL money, it doesn’t hit you until you come up $95,000 short at the end of the quarter.
You don’t want to think the worst about people, but sometimes what you see is what it is. So yes, SMBs do need to worry about embezzlement. It does happen and here’s what to look out for.
Red Flags Include
There are a number of situations in which even the most forthright people can go bad. If you have employees who have access to the books and are also exhibiting any of the following traits, you should monitor them a bit more closely.
- Living beyond their means
- Experiencing financial problems
- Displaying an unusually close association with vendors or customers
- Demonstrating excessive control issues
- Showing a wheeler-dealer attitude
- Going through a divorce or other family problems
You should also pay close attention to people who avoid taking time off. Yes, they might be extremely dedicated to their jobs. Or, they might be running schemes that would become obvious if other people did their work for a few days.
Of course, being in one or more of these circumstances doesn’t automatically mean a person will engage in nefarious activities. However, people who have done so have usually been in the above situations.
Signs Can be Subtle
Cash embezzlement seldom happens in one big hit. Instead, perpetrators skim a little here and there; though they do tend to become bolder as time goes on. Which, incidentally, is how most of them are caught. They get too comfortable. However, they’ve usually siphoned off a pretty significant amount of cash by the time they’re apprehended.
Preventive Measures Include
Access to keys, data and sensitive financial information should be restricted and monitored. Log-ins and signing out should be required so you can track activities. This also goes for inventory, supplies and merchandise. Granted, maintaining control over those items can be a bit more difficult, but doing whatever you canwill help dissuade casual attempts.
Always ensure more than one person is involved in every financial transaction. This way, they can keep an eye on one another, even while you keep an eye on them. You should also make it a point to review bank statements, credit card accounts, and other financial transaction records each month.
The good news is certain types of insurance will cover embezzlement. Known as employee dishonesty insurance, you generally have to inquire about it when you get a business insurance online quote.
Nobody wants to think anyone with whom they are associated would steal from them. But it happens. So yes, SMBs do need to worry about embezzlement. However, if you pay attention, you can catch it before it becomes too damaging.