Small businesses are particularly vulnerable to employee theft and embezzlement because of generally lax internal controls. According to Marquet International’s 2011 report, the most common embezzlement scheme involved the issuance of forged or unauthorized company checks. The report also revealed that nearly three-quarters of the incidents studied were committed by employees who held finance/bookkeeping and accounting positions.
What can small business owners do to prevent embezzlement in their business?
Pre-Screen new employees
One of the best ways to prevent to employee theft is to ensure that all new employees are carefully pre-screened. In addition to conducting a background and credit check on new employees, small business owners should make a point of speaking to former employers.
Make vacations mandatory
Employees who are tasked with handling cash or accounting duties should be required to take vacations. During this time, the owner or another employee can take over the responsibilities of the employee on vacation. This increases the potential of uncovering any fraudulent behavior.
One of the leading causes for small business failure is lack of liquid assets. Without cash, businesses cannot pay for their medium and long-term investments and in the worst case scenario it means they cannot meet their regular obligations such as their employee payroll.
THERE ARE TWO WAYS TO LOSE A BUSINESS:
- HAVING TO PAY OUT MORE IN EXPENSES THAN RECEIVED IN INCOME.
- HAVE A SUCCESSFUL (PROFITABLE) OPERATION BUT RUN OUT OF CASH.
CASH FLOW IS THE ABSOLUTE KEY!
Choosing A Business Account Does Not Have To Be Stressful
Read more articles at Bookkeeping Services of Charlotte, NC