The Association of Certified Fraud Examiners estimates that employee fraud is responsible for more than $2.1 trillion in losses each year. That’s around 5 percent of the total amount of money in circulation!
Worst of all, it’s entirely preventable. All you need are some proactive steps to spot it when it happens and prevent it altogether. In this article, we discuss how to do just that!
Create Incentives
One way to help prevent employee theft is to offer incentives for employees who report suspicious activity. These incentives should encourage employees to come forward with information.
Offer a cash bonus for tips that lead to employee fraud detection. Or, give a week of paid vacation to employees who blow the whistle on it. Incentives create a culture of transparency and accountability that will help prevent employee fraud before it happens.
Secure Inventory
Another step in how to manage employee fraud is to keep close tabs on what comes in and out of your inventory. This will help you spot any discrepancies as close to the moment they happen as possible.
In turn, this can help you identify potential instances of fraud. It also enables you to take steps to stop them before they do serious harm to your business.
Monitor Transactions
This empowers your organization when looking at how to prevent employee fraud. There are multiple ways to keep track of employee activity. That’s true at point-of-sale and online.
This will help you quickly identify any unusual or extraordinary behavior so you can investigate it further. Additionally, installing video surveillance cameras on cash registers acts as a deterrent to fraudulent activities in the first place.
The technology is much cheaper than in the past. It’s also less imposing and more discreet.
Commit to Accounting Best Practices
As accounting best practices continue to evolve, so too does the ability to prevent employee fraud. Preventative measures such as internal controls and segregation of duties create an environment that deters fraudulent activity.
Regular monitoring and review of financial statements identify unusual or suspicious activity. Make employees aware of these controls. Transparency could make employees think twice about giving in to desperation and temptation.
Use Technology
When it comes to spend management, businesses need to be aware of the many benefits that come with using the right tools and software. By implementing a good spend management solution, businesses can expect to see:
- Better spending visibility for reduced costs and fraud
- Improved compliance to enforce policies and procedures
- Enhanced security is built-in to the product to help guard against theft
- Increased productivity that automates manual tasks and processes, which are susceptible to fraudulent activity
- Greater insight through detailed reports and analytics to notice spending patterns
Employee Fraud Is Preventable
Employee fraud can have a devastating impact on businesses. To protect your organization, be proactive.
Implement measures for reporting suspicious activity, securing inventory, and monitoring transactions. Commit to accounting best practices. Use technology to help detect any bad actors.
Take these steps to ensure your business makes progress without a hitch. For more helpful business tips, check out some of our additional posts!
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