Employee theft and fraud is commonplace in too many businesses. In Australia the findings of an investigation undertaken by the Australian Federal Police found that 70 per cent of business fraud and losses come from employee theft, costing businesses $1.5 billion a year.
Don’t think this could ever happen to you? Think again.
What’s the chance that your tradesmen aren’t ‘borrowing’ a few washers here and there, a stick of silver solder and the use of an oxy? It sounds so minor but if this happened every day, by every team member, it adds up to more than you realise.
A well-designed loss prevention programme or basic documented procedures/systemisation of your business can help identify potential fraudsters even during the hiring process. It will also prevent the temptation of theft and/or allow you to detect attempts at fraud or theft in your business before it gets out of hand.
Here’s our top 10 tips to help make your business theft proof
- Minimise the risk of hiring a pilferer in the first place. Do thorough background checks on new team members and ensure you request two former employer details for character references. Do yourself a favour – make sure you call them both.
- Make sure your financial data (MYOB transaction entry) is reviewed by an outsourced accounting firm annually, if not bi-annually as a set procedure.
- Keep your accounts up-to-date. Regular reconciliation makes it easier to detect fraud.
- Conduct regular physical inventories. This could be stock onsite in a warehouse, in a vehicle or other. Once a year is not enough – reconcile stock with sales at least quarterly and involve an outside auditor if necessary. Occasionally do an unscheduled check. (We do random vehicle checks on material levels as they should match our vehicle standard material forms).
- Limit the number of people who have the authority to sign company cheques. Requiring two signatories is a real safeguard or best, keep it that you are the only one that can sign company cheques.
- Ask for bank statements to be sent to you personally. Check the statement for any irregularities before giving it to your internal accounts team.
- If you have a cash register, watch your cash register records. An excess of no sale or void actions indicates you could have a problem.
- Guard your petty cash. Have a ‘no receipt, no refund policy’ for all purchases made by team members.
- Be suspicious if team members refuse to take a holiday. This could indicate they are worried about being caught out in their absence.
- If you have an office, provide each team member with their own personal security code for access so that you are aware who is entering the premises out of hours.
Put in place these simple procedures and you’ll go a long way toward preventing fraud and pilfering in your business.
What’s next?
- Join our Kick-Ass Tradies Facebook Group, for access to trade business specific conversations, tips and resources, plus a like-minded community of tradies.
- Book a 15-minute Game Plan Call with Andy, owner of Dr. DRiP plumbing and co-founder of Lifestyle Tradie, to clarify your priorities and get clear action steps.
