Safeguard your business against employee fraud.
Unfortunately, about 64% of small businesses experience employee fraud. If you are a business owner, you should do everything you can to protect your business from the financial and emotional losses caused by an employee’s betrayal. Learn about the three common types of fraud and find out how you can safeguard your business against employee fraud.
3 Common Types
The 3 most common types of employee fraud are asset misappropriation, corruption, and financial statement fraud.
- Asset Misappropriation– This is the most common type of employee fraud because any employee at any level in the company can misuse company resources. Common instances of asset misappropriation include stealing from the company, forging checks, and using company vehicles for personal use.
- Corruption– Corruption occurs in cases where an employee accepts brides from vendors in exchange for favoring their business. Corruption also occurs when an employee offers unauthorized discounts or deals in exchange for payoffs.
- Financial Statement Fraud– This type of fraud is committed by employees that handle the company’s finances. Financial statement fraud occurs when an employee records fake revenues, exaggerates assets, or conceals expenses.
Protect Your Business
There are many strategies you can employ to protect your business from employee fraud. For instance:
- Screening Measures– When you are hiring a new employee, make sure that you conduct a thorough background check. Additionally, always check their references and track down previous employers if possible. A little detective work can uncover previously undisclosed criminal activity or past involvement in fraudulent activities.
- Surprise Inspections– Another way to keep your business safe is by conducting surprise inventory inspections or random spot checks of the company’s books. You don’t have to micro-manage your employees. Just keeping an eye on then can reveal employee fraud.
- Code of Ethics– Finally, establishing a code of ethics for your business can deter your employees from engaging in fraud. Emphasizing fair and legal business practices and encouraging your employees to speak up if they notice any issues will help keep your business fraud-free.
Try out these suggestions to safeguard your business against employee fraud. Want another way to protect your business? Then make sure you have the right insurance coverage to fit your needs. To find the right policy for you, turn to the experts at Valley West Insurance. Our dedicated team is ready to get you covered. Contact us to get started today.