Don’t Be a Statistic
You just do not think it will happen to you. You trust your employees. They are like family. But the sad fact is, employee fraud costs organizations more than $2.9 trillion worldwide, with 25% of businesses losing at least $1 million. These figures may seem sensational and unlikely for your business, but small companies are especially vulnerable to fraud. They usually lack anti-fraud controls compared to their larger counterparts. For more eye-opening stats from the Association of Certified Fraud Examiner’s 2010 Report to the Nations on Occupational Fraud and Abuse, click here.
Beware of an area especially ripe for employee fraud – cash receipts. On December 5, 2010, Karen Marie Sosa, 44, from New Jersey, was sentenced to seven years in prison for embezzling some $545,000 from Lynnes Nissan where she was an accounts payable clerk. Sosa was keeping cash receipts for the parts and services department instead of depositing them into company accounts. This is one of so many examples of employees pocketing cash from their employer.
The median loss suffered by organizations with fewer than 100 employees is $200,000. There are a number of proactive measures you can take to mitigate fraud in your business. Audit your recruiting and hiring policies – make sure you’re including a credit check where appropriate. Set up a fraud hotline. Reduce “cash-in-hand” scenarios where possible. Even simple things, such as establishing a culture rewarding loyalty and honesty, can help. For more tips on avoiding costly employee fraud, click here.
Sandra Chesnutt is a Marketing Director with AdvancedAR. She spoke with Frances Robinson, a valued AdvancedAR associate who makes collections calls as part of the AR services provided by AdvancedAR. AdvancedAR combines professional receivables services with fast and affordable access to funding – providing small and medium businesses the cash they need to grow and take advantage of market opportunities.