Best Practices to Reduce the Risk of Employee Fraud

5 Steps to Prevent Loss

Employee theft costs U.S. businesses an estimated $50 billion a year. For companies today, safeguarding against employee fraud should be a top priority. In this article we’ll explore a few ways that businesses can take steps to help protect themselves from fraud.

Looking to keep your company safe?

For any company with employees, preventing employee fraud is an issue that should be at the top of the list when it comes to safeguarding the business.

With employee theft costing U.S. businesses $50 billion a year, it’s easy to see why fraud prevention is so important.

The truth is, employee theft comes in many different forms, and there simply isn’t a one-size-fits-all solution when it comes to preventing fraud. From outright embezzlement to skimming extra hours, any form of employee fraud is serious, and all instances can cost your business and negatively impact your bottom line.

While fraud can be devastating, there are ways to go about preventing and reducing the risk to your company. With this in mind, here’s a look at some steps you can take to help prevent employee fraud.

Have Policies in Place

First things first: you should ensure you have proper policies in place.

Your policies should outline the various forms of fraud and time theft, as well as your company’s stance on these activities. It should also mention the checks that will be performed, as well as what steps will be taken should fraud or theft be found. You may also want to consider writing up a code of conduct to give to each employee at the time of hiring, outlining what is expected and what isn’t tolerated in the workplace. Educating your employees is the first step to preventing employee fraud.

Communicate Clearly

You should also make it part of your mission to be open with your employees about your stance on fraud and theft and ensure they understand you have no tolerance for theft in the workplace. While this should be outlined when you first hire your employee, you should take every effort to ensure that your views on this are not hidden. When employees are aware that you take this seriously, they’ll be much less likely to try it.

Perform Regular Informal Audits

Routine and regular audits performed by a third-party company or someone outside of your own company can be a great way to spot potential fraud or theft that could be taking place inside your company. While it is important to perform these audits regularly, it’s also important to be informal about when you perform them. Making unannounced audits can help to prevent employees from covering things up beforehand.

Consider Enabling Anonymous Tips

One of the best ways to find out what is really going on with your employees is from those who they are in close contact with. While many people are leery about turning their fellow co-worker in, you can make it possible for your employees to provide anonymous tips or insight to theft. While this is a highly effective way to stop fraud in its tracks, it’s also important to ensure that each employee who is suspected of fraud is thoroughly investigated. Always avoid rushing to pass judgment until you’ve gathered all the facts.

Update Security and Systems

Having outdated employee time-tracking systems or security systems is another way to invite theft and fraud into your company. Remember, not all theft is as obvious as walking out the front door with a bag of cash. Often fraud is committed internally, through computers with online banking or other internal systems. Even systems such as your time-tracking software can be an avenue for fraud if they’re not up-to-date.

If you suspect fraud, theft or any other illegal activity within your company, it’s important to take steps to address the issue right away. If you’re uncertain about which course of action to take, it’s best to contact an attorney to ensure the proper steps are taken. You should also be careful not to start a disciplinary process based on a gut feeling alone; instead, make sure you have all the facts in place and evidence needed before taking action.