Workplace theft and fraud account for billions of dollars in losses for businesses around the world, including Australia. Oddly enough, it’s small and medium-sized companies that are worst affected, as large companies have more sophisticated security systems and strict hiring policies.
Here are a few steps any business owner can take to reduce workplace fraud and theft.
Perform background checks on all employees
Small and middle size companies often have lax hiring policies. There is no HR department and the owner will typically hire anyone he likes, mostly trusting their gut feelings.
Trusting people is a good thing, but trusting any stranger can lead to serious consequences.
An ex-felon with a history of fraud or theft will try to ingratiate himself with the boss to get hired. Such a person will seem hard-working and always ready to lend a helping hand. Beware of job applicants that seem to be too nice and, in any case, ask them to submit to a national police check via services like Australian national character check or CV Check that streamline the process for new starters and can carry it out online. If it’s someone with a chequered past, they will probably refuse and seem hurt by your mistrust. Let them go and no hard feelings.
When they think of background checks, most business owners have in mind the tedious task of going to the police station, filling endless forms and waiting for weeks to get a police clearance. However, over the past few years, Australian companies have come to rely on online character check agencies, which do the same thing, only in a couple of days with no red tape involved.
Separate accounting duties
The main reason small businesses are more susceptible to workplace theft and fraud is that employees are often treated as family. Such companies have few employees all working together with everybody ready to take on another colleague’s job. This also refers to duties that have to do with cash transactions, purchase orders, merchandise inventory or accounting. On the one hand, it is certainly useful to have someone able to take care or business when a workmate is absent, but, on the other, this allows virtually all employees to have access to company funds and assets.
To prevent fraud and theft, it’s best to end such practices. There should be just one employee with access to cash, someone else in charge of inventory, and only one person in charge of accounting. This way the person managing the cash flow will know that should any sum go missing they’ll be held accountable.
Perform regular internal controls
Nobody likes doing audits and checking bank transactions, but if you do it regularly there will be less work involved and it shouldn’t be too much trouble. Go over the books every week, with or without your accountant. If you’re having any sort of doubts bring in an independent expert from time to time. Simply knowing that their dealings will be under review is in most cases enough to keep your employees on their toes.
Also check the company’s bank transactions. This is easily done nowadays when most people and companies use online banking. Just have a look at the past week’s transactions and look for anything that might be odd when you check your internal accounts controls. Ask for clarifications if you notice any irregular transactions. If you have any suspicions concerning one of your employee’s honesty, don’t hesitate to bring in independent fraud examiners.
Fire anyone guilty of fraud or theft immediately to set an example for the rest of your staff.