I Spy … Dealing With Fraud In Your Business - Lifestyletradie

I Spy … Dealing With Fraud In Your Business

“We couldn’t believe it when we started reading line for line our materials invoice. Hundreds of dollars of inventory that seemed like thoughtless purchases – 5 buckets in a week, 10 trowels, 5 sink mixers not billed to any job. Were they a billing mistake or was our team blatantly stealing from us? We thought we could trust them. They all seem so honest and reliable – we didn’t even think we needed to supervise them because they are so professional and diligent. How wrong we were.”

Don’t think this could ever happen to you? Think again.

Employee theft is, unfortunately, commonplace in all too many businesses. In fact, even apparently minor pilfering of the odd pen or pad of sticky notes, making colour photocopies on the office printer, and giving a discount to friends without permission, could be costing you real money right now or even worse, putting you at legal risk.

In Australia the findings of an investigation undertaken by the Australian Federal Police found that 70% of business fraud and losses come from employee theft, costing businesses $1.5 billion a year.

Don’t think that you are off Scott free in the service sector, with the idea that “my staff can’t ‘steal’ our service”. 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.

These staggering figures indicate that most businesses are just not dealing with the potential for fraud and misuse of business resources effectively. All too often significant funds, assets and resources will have vanished before anyone cottons on – and the offender will often leave the company before being caught.

But it doesn’t have to be like this. 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.

So here’s our Top Ten tips to help make your business theft proof;

1. 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.

2. Make sure your financial data (MYOB transaction entry) is reviewed by an outsourced accounting firm annually, if not bi-annually as a set procedure.

3.Keep your accounts up-to-date. Regular reconciliation makes it easier to detect fraud.

4. 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).

5. 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.

6. Ask for bank statements to be sent to you personally. Check the statement for any irregularities before giving it to your internal accounts team.

7.   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.

8. Guard your petty cash. Have a ‘no receipt, no refund policy’ for all purchases made by team members.

9. Be suspicious if team members refuse to take a holiday. This could indicate they are worried about being caught out in their absence.

10. 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.
It’s the beginning of a New Year… so why not start it off by putting in place these simple procedures? You’ll go a long way toward preventing fraud and pilfering in your business in 2019 and for years to come.

And with the New Year, comes the chance to make NEW business goals (other than theft-proofing). So what have you got planned for 2019?

Are you going to increase turnover? Double it?

Or are you going to take the time to systemize your business so ultimately, you can step out of it to spend more time with your family?

Whatever your plan… we can help…
This year, we are coming back (better than ever!) with our FREE Next Level Tradie 1-day live event!

Turn your goals into reality this year using our specific trade business success strategies (think marketing, hiring, systemising, cashflow, AND MORE) tested and proven in our own plumbing business.

CLICK HERE for more details & to grab your free ticket!