12 Ways Employee Stealing Can Occur In Your Small Business


The following are 12 ways employee stealing can occur in your small business.

  • Employee stealing of Stocks
  • Stealing of cash
  • Stealing by Cashiers
  • Overstatement of expenses
  • Stealing of company info
  • Diversion of customers/clients
  • Diversion of business opportunities
  • Stealing through accounts receivable.

Employee stealing may be defined as a situation where an employee takes goods from your business without paying for them.

By extension, it is also a situation where employee takes cash from the business without accounting for the cash.

Employee stealing occurs mainly in small businesses where internal controls are weak or non existent.

It can also occur  even when your business processes are computerized.

This article seeks, therefore, to highlight some of the most obvious signs by which you can know when  employee stealing is going on in your business

  • Sudden employee devotion to duty
  • Closing late without complaining
  • Not asking for overtime pay
  • Employee leaving above his income
  • Buying of expensive clothes and jewelry
  • Resistance to changes
  • Unwillingness to take annual vacation
  • High desire to buy things

Having identified the signs, it is now time to look at some of the many ways employee stealing can occur in your small business:

Employee stealing: Stealing of Stocks

Employee stealing of stocks can occur in many ways, including:

  • An employee can give a customer more goods than he actually paid for.
  • An employee can pass goods out from your shop using a friend.
  • A storekeeper can recycle some stocks back to suppliers after delivery to your store.
  • A Storekeeper can fraudulently decide not to record correctly all the stock items he received from suppliers
  • A Store keeper can write off some stocks without your knowledge or approval.

When any of the above occurs, the storekeeper usually sell the stocks at below the market value of the stocks.

He will later turn round to collect the cash from the illegal deal.

One of the ways you can prevent this sort of sharp practices is to make sure that:

  • stocks received from suppliers are completely and correctly recorded on your computer system or stock bin cards.
  • You need to verify all entries in your stock records.
  • stocks records are updated after every transaction.
  • Get a trusted staff to check all out going goods to ensure that all only goods paid for leave your shop.

Most importantly, whichever system you choose to use should be such that enable you to know the balance of each stock item at any point in time.


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Employee Stealing of


Employee stealing of cash can occur in your small business. In fact cases of stolen cash is on the increase.

This is because cash is very tempting and, oftentimes, very easy to steal.

It is can even occur even where your business processes are computerized.

The following tips should enable you to prevent employee stealing of your cash:

  • Use serially numbered sales invoices.
  • Use cash register
  • Reconcile the sales invoices with the cash register receipts on daily basis.
  • This daily reconciliation of cash sales should be done by you or a trusted senior employee.
  • It should not be done by the cashier.
  • You can also create another desk where invoices are first recorded before the customer pays to the cashier.
  • Ensure that daily sales are paid straight into your business bank account.
  • Your business cheque books, company seal and signature should be kept under lock and key.
  • Only authorized employee should have access to the records.

Most importantly, remember that the entire world is going digital.

You should not be satisfied using analog systems to run your business.

Computer based processes are cost-effective, efficient and very convenient for you and your customers.

Stealing By Salespersons

Your salespersons can steal your cash in the following ways:

  • Use some of today’s cash sales for himself, without accounting for them.
  • Use tomorrow’s cash sales to balance yesterday’s account.

This method of employee stealing of cash can continue for a long time, if not detected in time.

Beyond that, to prevent employee stealing of cash, you should personally track your cash.

To enable you to monitor your cash, you can install effective internal controls systems in  your small business.

Thereafter, you should get your employees to be familiar with the internal controls.

This way, they will have no problem following the rules and regulations.

Let your employees know that you are on top of your game.

Overstatement of expenses

Overstatement of expenses is another way employee stealing can occur in your business.

For example, a dishonest driver can purchase an automobile part for say N10,000 and tell the seller to give him  a receipt for N15,000! He helps himself with N5000.

Therefore, to prevent employee stealing, you should:

  • Obtain quotations from at least three suppliers before you make a purchase.
  • Use Local Purchase Order.
  • Compare prices and chose which supplier to purchase from.
  • Ensure that you make payment directly to the supplier
  • And obtain receipts for all payments made by you to suppliers.

Most importantly, remember that modern employees are very smart. So you need to be smarter to beat them.

Employee Stealing Of Company Info

As you probably know, every trade has trade tricks and secrets.

A dishonest employee can steal your business tricks/secrets and sell them to your competitors.

Employee stealing of business information  is usually done for financial gains.

Stealing and selling of your business secrets can affect your business in many ways, including:

  • Your competitors will know the tricks and secrets you are using in your business.
  • Competitors will improve on what they know about your business
  • And use it to kick you out of business.

Therefore, you should ensure that only trusted employees have access to sensitive info/documents. It is said that the secret of success is secret.

Stealing of business opportunities

Employee stealing of business opportunities can occur when an unreliable employee decides to divert your business opportunities to your competitors for his personal gains.

Oftentimes, this unwholesome practice occurs mostly when:

  • You do not treat your employees well.
  • Or you are not paying them what they are worth.
  • Delay their salaries which they need to support themselves and their families.
  • You do not give promotions and pay raises to deserving employees.
  • You do not allow your employees to to take annual vacations.

Therefore, one of the most effective ways to prevent employee stealing of your business opportunities, is to improve on the welfare package of your employees.

Employees Diverting Customers/Clients

Another form of employee stealing is when an unreliable employee decides to divert your customers to your competitor for financial rewards.

To reduces the chances of this occurring in your business, you need to know your employees in great details.

Furthermore, you must monitor the activities of your employees

Most importantly, remember that you are the owner of the business. And so you are on the driver’s seat.

Therefore, the success or failure of your business depends on your actions and inactions.

Stealing Via Accounts Receivable

Still another form of employee stealing is when an accounts clerk intentionally decides to understate the balance in a customer’s account.

In other words, he will not debit the customer’s account with the actual value of the goods supplied to the customer.

Thereafter, the accounts clerk will collect the difference from the customer and convert it to his personal use.

Yet another way you can lose money is when an accounts clerk writes off some amounts from a debtor’s account.

Consequently, the customer pays less than what he owes.

In any of these cases, the dishonest employee gains while you lose.

You should bear in mind that an accounts clerk has worked for you for many years does not mean that he cannot  steal your cash, if he has the opportunity to do so.

Similarly, that an accounts clerk is your relative does not mean that he cannot steal your cash, if he has the opportunity to do so.

Therefore, you should not take anything and everything for granted.

Periodic Stock Counts

Periodic stock count is another effective way you can prevent employees stealing of stocks from your business.

When your employee knows that you are watchful over your stocks and cash, he will not want to steal from your business.

To help you prevent employee stealing you should put a warning on the notice board that any employee caught stealing from your shop will be prosecuted

Division of labor

You can prevent employee stealing by introducing division of labor in your business.

In other words, each employee should carry out specific tasks.

A trusted senior member of staff should go round to monitor the activities  of your employees.

For example, you should ensure that one employee should not:

  • Place order for goods,
  • Receive the supplies,
  • Record them in the computer system or bin cards,
  • Make sales
  • Collect cash
  • and bank the cash.

You should, therefore, create a system of checks and balances.

That is to say, your employees should be able to crosscheck the work of other employees.

Furthermore, you can create a system where employees can report the misdeeds of a dishonest staff.

For this system to work fine, you should be able to hide the identity of the reporting employee.

This  can help you to reduce the incidence of employee stealing in your business.

Use of external auditors

Furthermore, you should be able to carry out unscheduled audit checks in all departments of your business.

Beyond that, you can also use external auditors to witness stocktaking in your small business, say two times in a year.

The mere thought of external auditors coming to witness stock counts is enough to discourage employee stealing from your business.

Related:9 Best And Most Effective Ways To Prevent Business Failure

Install A Camera

Another additional measure to discourage employee stealing from your business is for you to install a close circuit camera in your shop.

Let your employees know that the camera (even if the camera is not functioning) is recording all their activities.

Furthermore, you should closely supervise your employees.

However, note that supervision does not necessarily mean that you have to continuously look over the shoulders of your employees.

But it does mean checking their work to prevent employee stealing.

In conclusion, therefore, you should use  internal control systems to safeguard the assets of your business.

Business failure is not anything someone would want to experience. It is better described than experienced.


By Samuel Ijenhi,

B. Sc. Accounting (University of Benin),

Benin City, Nigeria.




About Samuel Ijenhi

A graduate in Accounting, University of Benin, Benin City, Edo State, Nigeria.
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