Employee Theft & Business Bankruptcy

Throughout many of our blogs we’ve outlined many of the different causes of bankruptcy as a type of roadmap for businesses to avoid insolvency. However, one area that we have yet to cover is oftentimes overlooked but can be devastating to a business’s financial well being. This problem can be tough to spot and, once spotted, difficult and uncomfortable to mange. The problem: employee theft.

With current harsh economic climates, poor money management, and inadequate marketing, keeping a business afloat is hard enough without having to worry about internal theft. However, the unfortunate truth is that a significant number of business bankruptcies are a direct result of employee theft. A study done by Statistic Brain says that the amount of employee theft in the U.S. amounts to about $50 Billion in losses annually. Furthermore, the sad reality is that the majority of individuals who steal from their company have a close working relationship with their boss or the business owner.

In order to prevent employee theft within a business and significantly lower the chance of business bankruptcy, there a few things to look out for:

Change in work schedule – If you notice that an employee has started coming in early and staying late, keep an eye on them. Especially if their workload hasn’t changed and their production hasn’t shown any noticeable increase.

Change in work habits – Watch for employees that are continuously seeking opportunities to work alone and/or unsupervised.

Change in spending – If an employee who normally complains about being broke or not being able to afford their internet bill is driving a brand new car, or wearing a brand new designer suit to work, it may be time to look into where the extra income is coming from.

The numbers don’t add up – Reconcile the books regularly and take special care to note whether or not they are balanced. Even the smallest inconsistencies over time can point to trouble.

Read between the lines – Most times, unfortunately, innocent employees know about the theft before the owner. Worse still, most employees won’t speak up. However, they may begin acting strangely towards the thief or distancing themselves completely. Pay attention and be on the lookout for this type of behavior.

While there is no exact science to outing a fraudulent employee, by remaining diligent and cultivating strong working relationships with your employees, you should be able to notice the red flags of internal theft before they lead to business bankruptcy.

For information on the liquidation services offered by Ideal Trading, please visit our website here. Or to contact us, please fill out the Quick Contact form to the left hand side of your screen.