How To Prevent Employee Stealing From Your Small Business

 

Employees stealing may be defined as a situation where an employee takes goods or cash out of your business on regular basis without payment.

Employee stealing occurs mainly in small businesses where internal control is weak.

  • Stealing of Stocks
  • Employee stealing of Cash
  • Stealing from cash register
  • Overstatement of expenses
  • Employee stealing of company info
  • Stealing of clients
  • stealing through accounts receivable
  • Recommended solutions

The following are some of the many ways you can know when employee stealing is going on in your business:

  • Sudden employee devotion to duty or closing late without complaining
  • Employee leaving above his income
  • Buying of expensive clothes and jewelry
  • Resistance to changes, such as transfers,  internal control systems.
  • Unwillingness to take annual vacation
  • High desire to buy things

The following are some of the many ways you can prevent employee stealing from work.

Employee Stealing of Stocks

Employee stealing of stocks can occur in many ways:

  • Firstly, employee can supply customers more goods than they actually paid for.
  • Secondly, employee stealing can occur when a store keeper recycles some stocks back to the suppliers goods already delivered to your shop.

Thirdly, employees stealing can occur when the store keeper decides not to record correctly all the stock items he received from suppliers.

The store keeper will later find ways to move out the unrecorded stocks. He then take the items for his personal use or sell them.

Therefore, you should make sure that stocks received from suppliers are completely and correctly recorded on your computer system or stock bin cards.

Furthermore, you should ensure that stocks sold are immediately deleted from stock records at the close of every sale.

This way, you should easily know the balance of each stock item at the close of every transaction.

Employees Stealing of Cash

Employees stealing of cash occur regularly in many small businesses. And it is one of the commonest causes of business failure. Cash is very tempting and often times easy to steal.

To help you prevent employee stealing, you should, therefore, use the following tips to protect your cash:

  • Use serially numbered sales invoices/slips to make sales
  • Reconcile the sales invoices with the cash register receipts.
  • This daily reconciliation should be done by you or a trusted senior employee. It should not be done by the cashier or sales clerk.
  • Make sure that all sales are correctly recorded in the sales day book.
  • Ensure that daily sales are paid straight into your business bank account without fail.
  • You should prepare bank reconciliation statement monthly to ensure that your cash and bank accounts are in order.
  • Your business cheque books, company seal and signature stamps should be kept under lock and key.

Stealing By Cashiers

Employees stealing can occur when a cashier uses the age long method of teaming and laden to steal cash.

Teaming and ladden is the term used to describe a situation where a cashier takes money from today’s sales for his personal use.

He then uses money from tomorrow’s sales to balance the money he took from the previous day’s sales. Sometimes, he does not replace the money he stole.

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

Therefore, to prevent employee stealing of cash, you should personally track your sales transactions. Do not allow smart guys to rip you off.

Employees stealing: Overstatement of expenses

Over statement of expenses is another way employees stealing can occur.

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 buy anything for your business.

You can use local purchase order to place orders with suppliers for your needs.

Employees Stealing Of Company Information

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

Employee stealing can occur when dishonest employees steal your company’s confidential information. Stealing of business information is usually done for financial gains.

The consequence is that, firstly, your competitors will know the tricks and secrets you are using in your trade. Secondly, they will improve on what they know about your business and kick you out of the competition.

Stealing of business opportunities

Employees stealing of business opportunities can also occur when unreliable employees decide to steal your business opportunities and sell them to your competitors for cash rewards.

Unfortunately, this practice happens 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 their families.

Therefore, to prevent employee stealing of your business opportunities, you treat your employees well.

Employees Diverting Clients

Another form of employees stealing is when unreliable employees decide to divert your customers to your competitor for financial rewards.

You should, therefore, shine your eyes and monitor the activities of your employees.

Employees stealing through accounts receivable

Still another form of employees stealing is when an accounts clerk intentionally decides to understate a debtor’s account in the ledger.

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

Thereafter, the account 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 connives with the customer to write off amounts from a debtor’s account. In other words, the customer pays less than he owes.

Therefore, you should not take anything for granted.  That an accounts clerk has worked for you for many years does not mean that he cannot   steal your cash, if he has the chance.

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.

Periodic Stock Counts

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

When your employees know that you are watchful over your stocks, they will not want to steal your stocks.

Another way you can prevent employees stealing is to put a warning on the notice board that any employee caught stealing from your shop will be prosecuted

Division of labor

You can prevent employees stealing by introducing division of labor in your business. However, this should depend on the nature and size of your business.

For example, each employee should be placed on specific job. Division of labor should ensure that one employee should not

  • Place order for goods,
  • Receive supplies,
  • Record them,
  • Make sales
  • And collect cash.

You should, therefore, create a system of checks and balances. That is to say, your employees should be able to cross-check 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 should help you to reduce the incidence of employee stealing in your business.

Use of external auditors

Furthermore, you should get external auditors to witness stocktaking say two times in a year.  The mere thought of external auditors coming to witness stock counts is enough to discourage employees from planning to steal your stock or cash.

Related: The Importance Of Internal Control In Your Small Business

Install A Camera

As an additional measure to discourage employees stealing from your business, you should install a camera in your shop. Let your employees know that the camera (even if the camera is not functioning) is recording all their activities.

Employee stealing occur mainly where supervision is non-existent or weak. In other words, employees stealing occur mostly where supervision is not effective.

Therefore, you should prevent employees stealing by blocking all leakages in the system.

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 employees stealing.

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