Often, a minority shareholder comes into such a situation and says he wants to go to the police or the prosecutor`s office. After all, if someone takes money that doesn`t belong to them without the other person`s permission, isn`t that theft? If you hide from your business partner the fact that the company paid for your family`s trip to Hawaii last year, isn`t that the same as stealing? One client absolutely insisted that his business partner who took advantage of an entrepreneurial opportunity (starting an undisclosed competing business and “stealing” work from his own business) must necessarily be considered a criminal robbery and actually wanted to sue the police for their refusal to do anything about it. (I dissuaded him.) Entrepreneurs need to understand that proving that a shareholder, partner or co-owner has stolen is not an easy task. The scenario can affect a company not only financially, but also in terms of performance. You must ensure that every step of the process is carried out carefully, with the help of an appropriate lawyer who will ensure that everything is carried out in accordance with the letter of the law. There is a common denominator in the reasons why small businesses are more likely to fall victim to fraud and embezzlement, and that is the trust the entrepreneur has in their employees. The owners of a business founded during the Great Depression had a solution. They were so frugal that at the end of each day, employees had to put their pencils back! You don`t need to keep a tight grip on it. However, reasonable controls are a proven method. Learning that someone is stealing money from your own business is very troubling and difficult to deal with, but it`s even worse if it`s a business partner or someone involved in owning your business. If this happens, that person is breaking the law and can be prosecuted.
It`s a very moving experience to find out that your trusted partner is stealing from you or the company. It is supposed to steal every time someone gets something out of the company for personal gain. There are different types of theft: A similar theft occurs when a partner or family member of a family business takes out unauthorized loans on behalf of the business. Unfortunately, it`s not that simple. If you go to the prosecutor and say that your business partner took money from the company without permission and asks your business partner about it, all they have to do is lie and say they had a license. Prosecutors find it almost impossible for them to prove such a case in such a case beyond a reasonable doubt, so they almost never try. The employee steals the company`s products. Examples include jewelry or perfumes from a high-end retail store. Typical victims are small retailers that do not have shrinkage control. It`s amazing how many homeowners simply stuff inventory into a storage room without a tracking system. The employee who embezzles the funds sets up bad employees, collects the salary and cooks the books to hide the transaction. This happens in businesses with absentee owners or overconfident owners who are not paying attention.
Examples of padding range from occasional attempts to justify an expensive lunch with a “creative” description to sophisticated embezzlement plans. Short embezzled more than $20,000 from its employees by using the funds held on their paychecks to pay for the company`s general expenses, rather than passing those amounts on to their respective planned plans. Prevention: Regularly review detailed expense reports (not just summary reports), broken down by vendor, amount, and purpose. Staying familiar with your numbers makes it easier to know when a payment or accounting entry seems suspicious. If your company is large enough, separate the functions that employees perform. Prevention: Use security cameras. Implement an inventory management system and regularly check inventory levels. There`s even point-of-sale technology that tracks invalid transactions and discounts and notifies the owner or manager. But what if the same employee also manages the accounting system and realizes that no one but her is paying attention? Using a corporate credit card for personal use, combined with fake accounting documents, can lead to massive examples of embezzlement. Prevention: Lock up most of your supplies and fill an open supply area sparingly to keep the withdrawal low. A security camera can help. Discuss the use of consumables at a company meeting to set the tone and convey the company`s values.
Embezzlement occurs when an employee or someone else in a trustworthy position steals from your business. They use money or other assets for their own use. Next on our list of examples of embezzlement is when an employee steals funds from the company but tries to hide them as payments to suppliers. Unfaithful employees can create fake supplier invoices and modify accounting system entries to hide their tracks. Prevention: Correct employee expectations and clarify your policy, whatever it may be. Some employers encourage parallel activities, but others do not have undeclared work policies. Even if you allow parallel activities, make it clear that activities should not be performed during work hours and that company resources cannot be used. The employee gives a family member a laptop or mobile device and tells the employer that they have been lost.
The company then replaces the item. From time to time, however, embezzlement occurs from top to bottom. The employer actually steals employees` financial assets, for the same reasons that traditional bottom-up embezzlers do: because they want to and because they can. I call these money embezzlers from top to bottom “reverse embezzlement.” While the amounts they steal tend to be smaller than the amounts stolen from the company`s assets, the comparative damage than the embezzlement of funds inflicted on their victims is far more dramatic and deeply tasteless. With that in mind, I`m going to give you Evan Short, The High-End Guy, and Jerome Aronson, The Employee Hater. The employee pays for his personal expenses with a company credit card. The good news is that these thefts are often sporadic and the amounts are small. The question “Can you be turned away from your own business?” is common. The sad reality is that most cases of fraud take place in small businesses.
According to the Association of Certified Fraud Examiners, the losses that smaller companies have to absorb are exponentially greater than those suffered by large companies. You might be tempted to think it`s stealing from customers, but it`s really a type of embezzlement. Your company is responsible for overbilling and must make it good for customers. An employee at the cash register invalidates the transactions and pockets the money. This is a common way to siphon money from a small retail business. Next on our list of examples of embezzlement is when there is only one legitimate business expense, but the employee receives two refunds. She first pays for a problem with the company`s credit card. Later, she submits a request for reimbursement of the same cash costs. The employee diverts money intended for tax transfers on the employer`s payroll or to other taxpayers` money. Finally, the tax authorities will crack down on the business owner for not sending the tax money and may file a lien against the business or seize property. So not only do you have losses due to embezzlement, but you also have the IRS on your tail – a double shot! Embezzlement often involves a white-collar crime in which funds are taken from bank accounts or when it comes to cheque forgery or wage fraud. But this is not limited to these circumstances.
If someone steals money from your own business, it could be very worrying, it`s even worse if it`s a business partner. Read 3 min Prevention: Conduct a regular review of customer billing. Pay close attention to customer complaints about billing errors and demand thorough explanations from employees about how they occurred. .