The idea that your employees might be defrauding or stealing from you is an uncomfortable thought for any business manager; however, with a report in Entrepreneur indicating that employee fraud cost UK businesses a whopping £40m last year, this is clearly a very real issue that needs to be addressed.
Some of the most common types of fraud include things that will create financial gain to the employee, such as lying about payroll issues, creating expenses for services that were never incurred, and billing schemes such as creating false invoices/vendors. Even coming in late or using company time in a non-productive manner could be classed as a type of fraud. Your employees are being paid to provide a service and you are giving them money for nothing if they fail to do so.
This is a delicate issue to address and tough to prove; however, the effects of fraud can be catastrophic, especially for small businesses with less than 150 employees. Let’s look at a few ways that managers can prevent and tackle workplace fraud:
Conduct a fraud risk assessment to identify any areas in which your security could be improved. You should also be sure to keep on top of your finances by keeping monthly reports so that any sudden changes or discrepancies are obvious. You could hire an accountant to help you out with this if necessary.
Carrying out annual anti-fraud training is a good way to let your employees know that you recognise the nature of fraud and are aware of the ways to prevent it. This also gives them an idea of what is acceptable and what the potential consequences of fraudulent activity could be for them.
It is important to divide duties – especially financial ones – between multiple members of staff. No one person should have sole responsibility or control over financial aspects such as payroll or invoice processing, as this makes it far easier for them to manipulate the numbers and commit fraud.
Creating a culture of integrity and mutual respect is a good way to show your employees that they are valued. Employees who feel respected and valued at work will be far less likely to defraud the company and may also feel more able to raise their concerns if they suspect that other members of staff are committing fraud.