Not all criminals look like monsters.
Embezzlement is a serious crime that can negatively affect your business. When an employee embezzles funds, they are misappropriating those funds for personal use.
White Collar Crime Watch spoke with an employment attorney at Snider & Associates, LLC who told us just how harmful embezzlement can be for businesses.
What Embezzlement Does to Your Business
The most obvious negative effect is the loss of funds that have been misused. This will hurt the business’s profits. Since the goal with any business is to make money, embezzlement can cause great harm to a business, potentially destroying it altogether. The more money that is embezzled, the greater harm the business will suffer.
Embezzlement can also harm your business’s reputation. Your company’s name can be tarnished, and customers might not trust you anymore. This can greatly harm your business, with customers abandoning you and your business, slowly sending it down the drain. Even though the embezzlement wasn’t your fault, criminal activity associated with your brand is bad for business.
Embezzlement also messes up accounting. For instance, when someone has been embezzling, you might think you have more money in the bank than you do. You might go to order merchandise or supplies and find that the funds aren’t available. You might not be able to make up the losses, so you will have to figure out a way to fix the situation just to meet operation costs.
Trust is lost because of embezzlement. When an employer finds out that one employee has been embezzling, they often grow suspicious of all of their employees. Sometimes they will institute strict rules and this can poison working conditions for everyone.
What Can You Do to Combat Embezzlement?
First, understand that it can happen to you, and that you need to guard against it. Don’t be one of those people who pretends that nothing bad will ever happen to them.
Next, background check all employees. This won’t prevent all embezzlement, but it can minimize your risk.
Moreover, be sure that all funds are put through a checking account to create a paper trail. It’s difficult to keep track of funds that never hit a bank account.
Finally, separate the duties of your employees. Make sure that one employee isn’t handling all aspects of the finances. For instance, even if you have a small business, your employee can set up payments, but you have to sign off on them.
Don’t Be Complacent, Lest You Become a Victim
You can be a victim of white-collar crime like embezzlement, but you don’t have to be. You can take preventative measures that can significantly lower your risk of becoming a victim. White Collar Crime Watch will be back next week with more information on how you can prevent white-collar crime.