Protect your business from employee fraud.
As a business owner, you know that there are threats to your company everywhere. One of the most serious dangers that your company faces is the threat of employee fraud. Approximately 64% of small businesses experience employee fraud at some point during their operation. With employee fraud becoming a bigger and bigger issue, it’s important that you learn more about this threat. Here’s what you need to know about employee fraud and how you can prevent it.
There are three common types of employee fraud, asset misappropriation, corruption, and financial statement fraud.
- Asset Misappropriation: Asset misappropriation is the most common type of fraud because any employee at any level of your business can abuse company resources. Common examples of this type of fraud include stealing company goods, forging checks, and using company vehicles for personal use.
- Corruption: Corruption occurs when an employee accepts bribes from vendors or customers in return for preferential treatment. Additionally, corruption takes place when an employee offers unauthorized discounts or free goods and services in exchange for personal payoffs.
- Financial Statement Fraud: This type of fraud is committed by employees that have access to the company’s financial books. Financial statement fraud occurs when an employee records false profits, inflates assets, or hides expenses.
How to Protect Your Business
To prevent the financial and emotional losses that result from employee fraud, you can start by employing stricter screening measures when hiring a new employee. Make sure to conduct a thorough background check and contact previous employers if possible. A little detective work could uncover undisclosed criminal activity or previous involvement with fraud. Another way to protect your business is by conducting surprise spot checks of your employees’ work. Randomly going over your business’s financial statements or spontaneously conducting an inventory inspection could reveal any wrongdoing. Finally, establishing a code of ethics for your business can deter fraud from taking place. Emphasize fair and legal business practices and encourage your employees to speak up if they notice any questionable behavior. This will make your employees less likely to get involved in any fraudulent activities.
Try out these strategies to protect your business from employee fraud. Want another way to keep your business safe? Make sure it has the insurance protection it needs. To find the best policy for you, contact the dedicated team at East End Insurance Agency. Located in Southold, New York. We are ready to get you covered today