4 Ways To Protect Your Small Business Against Employee Theft

Running a small business is challenging because every dollar and every employee matters. Most business owners don't want to think that their employees could steal from them, because in many cases, their employees are their relatives and friends. Unfortunately, employee theft happens all too often, especially in the small business environment where a single employee may perform many financial job functions unsupervised. Learn how to protect your business against theft by reading and implementing the tips below.

Create termination procedures to ensure that everything is returned when employees leave.

It is essential that you retrieve property from employees before they leave the building whenever possible. Ask for any business-related keys that the employee may have. Accompany the employee to his or her work area to gather personal belongings. This should always be monitored to deter theft of small items and cash. Have the employee sign a statement that all company property has been returned and/or left in the work area, and escort him or her out the door.

Don't forget about other types of theft. If the employee has access to passwords to your business's social media accounts, financial accounts, order management systems and other tools, change them immediately. If you don't know them, ask for them before the employee leaves. Your IT department should be able to take care of this before the employee leaves. Otherwise, hire a consultant to come in to change them if you don't have an IT department and don't have the expertise or time to handle it yourself.

Change the locks when employees leave or are fired.

Businesses are especially susceptible to theft when disgruntled employees are fired. Some lash out by stealing property, merchandise or money, especially if they have access to the business after hours. Most employees who leave on good terms and with notice won't do anything to hurt your business—they need references from you in the future—you should be suspect of anyone who leaves abruptly. Although it may seem expensive, you should either change the locks or have a commercial locksmith do it for you when any employee leaves. If your employees use an access code to enter the building, change that, too.

Create a system of checks and balances.

Small businesses are especially prone to financial theft because they rely heavily on a small number of employees to take care of many duties. According to the Association of Certified Fraud Examiners, the five most common fraud schemes for small businesses are corruption, billing fraud, skimming, check tampering and expense reimbursement fraud. Many small businesses don't even report the crimes because the perpetrators are often family members or close friends.

In order to prevent massive fraud by a single employee, institute a system of checks and balances. Don't allow one employee to take care of all the bookkeeping. Have one in charge of accounts receivable and another in charge of accounts payable. Finally, don't entrust signing the checks to anyone but yourself.

Maintain a positive work environment.

Disgruntled employees leave because they're, well, disgruntled. This often happens in toxic work environments when employees feel harassed, bullied or unappreciated. As the employer, it's your duty to ensure that you're maintaining a positive work environment. Be kind to employees, squash negative behaviors from employees and show your appreciation for the work that's done every day. Happy employees are usually more honest, and they're less likely to take things that aren't theirs.

By implementing these tips and procedures, you'll be able to reduce your risk of employee theft. You'll also be able to better deal with employees who leave abruptly or are fired.