How many times have you heard—or even said to yourself?—”It could never happen to me!”
That is an all-too-common sentiment among small business owners when it comes to employee embezzlement.
An owner lets his or her guard down, trusting key employees with the company finances, and then one day discovers that the business is missing thousands of dollars—or worse.
These types of situations happen more frequently than one might suspect. And that's the problem: Most business owners and managers are lulled into complacency, believing this this could never happen to them. That is, until it does.
This issue arises periodically in the retail and commercial tire business, and recently we learned of another such incident.
In this case the fraud was discovered only after a review of accounts receivable.
For those who've experienced such deception, it's like finding out that your spouse has been cheating on you. It hits you hard —just like a punch in the gut.
Like any such deception, there are numerous incidents, to varying degrees, of cheating employees—especially in small businesses that can't afford an accounting department and formal oversight.
According to fraud prevention experts, employees who steal thousands of dollars from their employers are often the people the owners trust most.
These people usually are put in positions of confidence, such as management or accounting.
And because the owners trust them, little need is seen for oversight or preventive measures. That's a big mistake.
This is a particularly common problem at smaller businesses like many tire dealerships. The owner is busy every day fulfilling orders, servicing customers and meeting deadlines.
Often, they have little time to focus on the internal day-to-day functions of the business.
That's just the type of an environment where embezzlers thrive.
So what's a small-business owner to do? First and foremost is the need to implement safeguards to prevent embezzlement, or at least catch it early on.
Fraud prevention experts suggest simple measures, such as conducting surprise audits as well as setting up a fraud hotline where employees can report suspicious activities.
Trusting employees doesn't mean you can be oblivious to their activities within your business.
Like the mantra used to describe the global nuclear weapons race—”Trust but verify”—running a successful business means keeping tabs on all the many functions that hold it together.
Taking a lackadaisical approach to your livelihood can result in you losing your shirt.