Securing Your Inventory and Property
Grow Your Business, Not Your Inbox
It can be difficult to prove that an employee is stealing your equipment or inventory, but this can be extremely costly fraud. The key is not to catch someone in the act, but to enact policies that prevent it from happening. Use these techniques to help stop employee theft in its tracks.
Run regular inventory audits
Occasional inspections and audits of inventory will help prevent fraud and theft. Like your accounting audits, make these inventory checks a surprise. These audits will keep records current, and make it easier to detect theft. Keep track of valuable equipment or inventory by serial number or other identifier, and match these numbers to your records.
Create inventory control policies
Different industries will require different controls, but be sure your business institutes some of these basic steps:
- Match actual counts of units, cartons, etc. to shipping documents before merchandise is released to a shipper.
- Never allow merchandise to leave the premises without an invoice or appropriate shipping documentation.
- If you have expensive components, products, or tools, consider putting them in a locked closet or cage, and limit access to this area.
- Make sure all purchase orders, invoices and shipping documents are consecutively numbered, and review them regularly for missing documents.
- Keep purchase orders, invoices and shipping documents under lock and key.
- Have all employees exit through one door at the end of their shift, supervised by the owner or a trusted employee.
Check your trash
Employees who want to steal from your business will come up with creative ways to get it done. One common method is to put items in the trash or in a dumpster, then return when the office is closed and no one is around to take it home. Conduct regular spot checks of your trash after hours - a quick glance in the dumpster could alert you to a possible theft. Have someone flatten all trash cartons and bundle them before throwing them out so they can't be re-used to steal inventory or merchandise.
Know who has your keys
Only specified employees should have keys to your business. Make your employees fill out a form when they receive keys to your office. Record the number of the key and other pertinent information. Make certain the original key is returned when the employee leaves your company. If keys are lost, replace locks immediately. Have your locksmith mark every office key "Do Not Duplicate" to prevent unauthorized copying.
Set a good example
Be careful not to create a corporate culture that invites fraud. Employees look to their managers for direction. If you do business in an unethical manner, your employees may believe its okay to steal. For example, employees who see a business owner taking home office supplies may believe its okay for them to do so as well.
Investigate every employee's prior work history before you offer employment. Take extra precautions with anyone you hire who will have financial responsibilities. Check references closely. Call previous employers to verify resume and application information. Invest time to make sure that applicants do not have a record of stealing from previous employers.
A fidelity bond is a form of insurance that protects your firm in cases of employee theft. The bonds can be used to reimburse you for any established losses your firm is able to verify. Fidelity bonds are most commonly used to cover cash losses, but can also be used to cover merchandise losses as well. An added bonus - some bonding companies will check an employee's background before bonding, which can help you weed out potential problem employees. Your insurance agent will be able to help you regarding cost and coverage.
The views and opinions contained herein are not necessarily those of American Express and are intended as a reference and for informational purposes only. Please contact your attorney, accountant or other business professional for advice specific to your business.
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