Separate the responsibilities of accounts payable employees. Make sure the person who is paying the bills (i.e. signing checks) is different from the person who is logging the information into the computer. When you split the two job responsibilities it becomes harder to manipulate the data, says Smith-Valentine. Also, don’t allow the data entry employee access to the mail. This will reduce the data entry clerk’s ability to steal a check and cover it up.
Perform random audits of vendors and clients. Let your staff know that once every six months you will choose a business that your company does business with and randomly audit it. Randomly choose checks from your bank statements, find out who the checks were made out to, and then audit that company. Consider hiring an outside accounting firm to do this; it will put the employees on notice that there are people other than you watching them.
Encourage employee watchdogs. Implement a process for employees to anonymously report abuse and fraud. Also let them know that they could be rewarded if information they provide leads to the arrest of an offender.
Purchase employee dishonesty insurance coverage. Taking time to detect fraud and clean up the aftermath is time you could be using to run your business. You can purchase inexpensive insurance plans to help defer some of the costs that occur as a result of fraud or embezzlement.
Encourage employees to take vacation time. A lot of small business owners are happy when their employees work as much as possible. But the embezzling employee will never take off time. They come in early, stay late, and they always want to discourage you from looking up information on your own, says Smith-Valentine. “If something strange is going on, it is probably going to pop up while they are gone.”
Fraud Awareness Week