Count On Reducing Small Business Theft This Year

Here’s a costly scam that often bleeds cash for months before it’s detected: an employee undercharges customers and keeps the difference. For instance, a pub patron pays $15 for a drink. The bartender rings up a $10 sale and pockets $5.

Why does this sleight of hand defraud small businesses so deftly? “Daily receipts don’t flag this kind of theft,” explains John Gugliotta, President, Paul Davis Restoration of Boston South, Boston Metro West, and Rhode Island, Massachusetts. “Inventory counts do reveal the mismatch but many owners put off inventory reconciliation because it’s labor-intensive and time-consuming. The best defenses against this con? Don’t accept cash, evaluate inventory frequently and investigate even small discrepancies.” 

Small business theft is diverse, rampant and expensive. Experts estimate that more than eight of 10 small companies are victimized every year. Four of five companies report monthly losses ranging from hundreds to thousands of dollars. Awareness and smart precautions, however, can safeguard bottom lines against common criminal tactics:

Stealing inventory or intellectual property: Employees remove items of value for resale or their own use.

Precautions: Install security cameras; perform employee background checks; reconcile inventory frequently; control access to business locations and key business systems; and shield sensitive intellectual property. 

Embezzlement: Employees – typically those who handle money – skim money from the company’s cash flow.

Precautions: Promptly investigate missing funds, accounting errors, unauthorized account changes or unexplained discrepancies in financial documentation. Hire external accountants to audit the company’s books.

Burglary: Thieves access the business and steal valuable items.

Precautions: Site your business in a safe location; install security cameras; install an alarm system; and prominently post “Security cameras in use” signs as deterrents. Hiring security personnel is a wise protective step as well.

Customer fraud: Customers may claim they did not authorize a charge, purchase a product or receive a purchased product. Alternatively, customers may use fraudulent purchasing methods such as stolen credit cards.

Precautions: Educate yourself and your team on common fraud tactics; institute a reporting system that immediately flags and sleuths suspected fraud. 

“Another smart step is insuring your company against theft,” Gugliotta advises. “If thieves strike and cause damage despite your best efforts, call us. Our top restoration professionals are ready to get your business back on track.”