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There are signs when an employee commits fraud

On Behalf of | Oct 5, 2022 | Business Law, Criminal defense, Employment Law |

Running a small business involves a wide range of challenges. These include drumming up new business, working with vendors, remaining compliant with all applicable regulations, and managing day-to-day operations. Many owners do this with the help of employees. A certain level of trust goes into hiring anyone, but that trust is especially critical for those handling money and finances.

Unfortunately, sometimes that trust can be misplaced, and owners learn too late that the person hired to do the books is stealing from the business. Many assume that they have built a reliable team and that illegal behavior occurs in larger companies or corporations that handle large amounts of money. Still, it can happen in small companies with limited resources by someone you trust and treat as family.

Seeing the signs

Many owners are not “numbers people,” with skills more focused on building business relationships and sales. Perhaps they are idea people or entrepreneurs. The owner may not recognize red flags by reading an accounting ledger. However, there are certain signs to look for even when you are not good with numbers:

  • An accountant or employee who refuses to input all bookkeeping into a reliable software program
  • An accountant or employee who does not take time off or allow others to access the books
  • The company’s cash transactions have not been reconciled in more than a month
  • Frequent inventory shortages
  • Checks out of the company account or charges to a company card that are not accounted for
  • Multiple payments to the same vendor or substantial increases in payment
  • There are vendors you do not recognize
  • Missing cash

There may be an inclination to pass these signs as an error or no big deal, but failure to act on any of these or other signs can further embolden the employee to take more and more.

What do you do?

Some may not relish the idea of a civil lawsuit involving damages or a criminal case (fraud can be either), but employee theft is never the price of doing business. These actions affect the ongoing viability of a company and directly impact its bottom line. Those with suspicions or concerns can contact a law firm that handles both kinds of fraud and can put an end to the theft and deceit. This can involve legal action or working out an arrangement to repay the debt.

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