November 11, 2018
5 Ways To Keep Your Money Safe
Business owners often develop a sixth sense when one of their employees shows signs of addictive behaviour. Traditionally we associate fraud and theft from a small business with gambling and addiction problems.
Yet a recent report in The West Australian newspaper of a woman who siphoned more than $1.2 million from two small businesses because she enjoyed shopping, having coffee with friends and splurging on “nice things” represents the stuff of small business nightmares.
How do you keep your money and your business safe from these types of employees?
The fact that the woman at the centre of the case has been jailed for more than six years is cold comfort to the small business that was bankrupted due in large part to her fraudulent behaviour.
Here are five simple ways small business owners can keep their money safe from potential employee theft and fraud.
- Protect Your Finances
Many small business owners don’t do enough to separate their business bank accounts and credit cards from their personal ones. If you fall into that category, get cracking now.
Quarantining your business accounts make it harder for an employee to pillage all your accounts. If you use online banking for many of your transactions ensure you have automatic logout activated and keep your ID, passwords and security dongles in a safe place.
Implement a controlled employee expense reimbursement policy. If you issue company credit cards to employees, explore your card provider’s fraud protection, such as automatic alerts if your employee expenditure exceeds a set amount.
Where possible, pay your bills online and lock the paper copies away in a secure cabinet to reduce the opportunity for identity theft. The more paperwork you leave lying around the more likely it is that a bill with banking information may fall into the wrong hands.
- Conduct A Thorough Employee Background Check
When making new hires, finding trustworthy staff is crucial to your business success. Never rely solely on employee history or references. Once you have a preferred candidate conduct a thorough background check before you make a final decision.
It may cost you $30 to $50 for a report but it is worthwhile for the peace of mind it brings. When you narrow down a list of potential hires to one or two people, you can run a check on the finalists.
- Implement Effective Checks And Balances
It’s not unusual for one person may wear several hats in a small business. However, the biggest threat to your business is not the competition, its a multitasking office administrator and/or bookkeeper who opens your mail, makes deposits and creditor payments and files your paperwork. Allowing one person to have access to multiple aspects of your business is a red flag.
Similarly, never task the same person to handle creditor payments and purchasing. Likewise, allowing the same staff member to handle accounts payable and accounts receivable exposes the business to potential fraud.
Disguising unauthorised transfers as payments to legitimate creditors was one of the ways the fraudster in the West Australian case was able to siphon funds from the two Perth businesses.
Splitting the business into two areas of operations, where one staff member is responsible for incoming cash, checks, consumables and merchandise, while another manages outgoing payments, orders and finished products adds a layer of security to your business.
- Secure Access To Your Business And Its Records
Secure entry systems keep out unauthorised visitors and provide a time-stamped electronic record of employee’s entries and exits to and from your office.
Moreover, owners can limit access to specific areas to authorised people such as your server cabinet. Limiting access to sensitive areas keeps your business safer.
Similarly, enforcing a company policy on securing confidential documents and compartmentalising access to confidential computer drives or systems access greatly reduces the opportunities for employee fraud.
- Monitor Employees’ Behaviour
Noticing changes to an employee’s pattern of behaviour be its losing documents, paying excess attention to an individual customer or supplier is a key way of safeguarding your business.
Similarly, while we all appreciate a dedicated employee, if you find an employee with access to confidential areas of your business, particularly its finances who routinely comes in early or leaves late, when no one else is around or who never takes their annual leave, that is another red flag.
They are rarely putting in the extra hours because they love their job. Often its because they don’t want others to witness what they are doing. Insist your staff use their annual leave and stick to more usual business hours unless there are exceptional circumstances. Pay close attention to any strange blips in your operation, regardless of how seemingly trivial they appear. They could be masking a broader problem.
Trust but verify is a great adage for small business owners. Trust your gut and remember no one understands your business as well as you. If something feels off and doesn’t look right, it’s probably not. So, be active in your business, monitor your staff and investigate unusual occurrences. Finally, consider taking out an insurance policy with specific protection against employee theft or fraud.