As a small business owner, you’re required to wear a variety of hats. Hiring employees can be a smart way to avoid burnout and improve productivity when the tasks of operation become too much.
There is a dark side to delegation, however. And that is as the number of people you choose to rely on increases, so does your vulnerability to embezzlement. Occasionally, an employee may see an opportunity to take money from your business without you even noticing. This theft could cause serious damage to your operations and hurt the overall success of your business.
Fortunately, there are some simple steps you can take to protect your business, starting even before you choose to hire someone. First, conduct background checks. There are many services online that will do this for you. One way to narrow your choices is to find a company that is complaint with the Fair Credit Reporting Act. Doing so will help you find anything concerning in the potential employee’s past.
Second, ask for references and previously employment history and then follow up on them. A few minutes on the phone with prior employers or references can help you gain valuable insight into whether a candidate is a good fit for your business.
After you have made a hire, proper training of that new employee is crucial. The new employee should be taught what is expected of them, what processes are in place for the handling of company funds, and what safeguards are in place to monitor the handling of those funds. If the new employee knows up front that someone is watching the company’s coffers, they’re less likely to reach their hands in them.
Next, be sure you have processes in place that can help to avoid potential opportunities for theft among your employees. One way to do this is to involve more than one employee in the handling of business accounts and money transactions. This can be done in a number ways, such as having two employees always work together on every deposit, or having one employee do the deposit while another verifies it.
As the owner, you also need to ensure you review your accounts on a regular basis. By making this a priority, you will be able to catch any suspicious activity early and stop the problem before it escalates.
Finally, talk with your insurance agent about purchasing coverage for employee dishonesty. Policies exist that will help you recover either a portion or the entirety of what was lost through embezzlement. Some policies will also cover the expenses you may have incurred in discovering the embezzlement, such as accounting fees and attorney fees.
It is impossible to know for certain whether a potential employee may steal from your business. However, taking extra precautions in the hiring, training, and monitoring of your employees will go a long way in preventing any potential issues big or small.
If you suspect an employee is stealing or has stolen from your business, contact me and I would be happy to assist you with protecting your business and recovering any money taken from you.
Kevin M. Bischoff