Securing Your Inventory and Property

Employee fraud can be costly. These tips will help you stop employee theft in its tracks.

It can be difficult to prove that an employee is stealing yourequipment or inventory, but this can be extremely costly fraud. Thekey is not to catch someone in the act, but to enact policies thatprevent it from happening. Use these techniques to help stopemployee theft in its tracks.

Run regular inventory audits
Occasional inspections and audits of inventory will help preventfraud and theft. Like your accounting audits, make these inventorychecks a surprise. These audits will keep records current, and makeit easier to detect theft. Keep track of valuable equipment orinventory by serial number or other identifier, and match thesenumbers to your records.

Create inventory control policies
Different industries will require different controls, but be sureyour business institutes some of these basic steps:

  • Match actual counts of units, cartons, etc. to shippingdocuments before merchandise is released to a shipper.
  • Never allow merchandise to leave the premises without aninvoice or appropriate shipping documentation.
  • If you have expensive components, products, or tools, considerputting them in a locked closet or cage, and limit access to thisarea.
  • Make sure all purchase orders, invoices and shipping documentsare consecutively numbered, and review them regularly for missingdocuments.
  • Keep purchase orders, invoices and shipping documents underlock and key.
  • Have all employees exit through one door at the end of theirshift, supervised by the owner or a trusted employee.

Check your trash
Employees who want to steal from your business will come up withcreative ways to get it done. One common method is to put items inthe trash or in a dumpster, then return when the office is closedand no one is around to take it home. Conduct regular spot checksof your trash after hours - a quick glance in the dumpster couldalert you to a possible theft. Have someone flatten all trashcartons and bundle them before throwing them out so they can'tbe re-used to steal inventory or merchandise.

Know who has your keys
Only specified employees should have keys to your business. Makeyour employees fill out a form when they receive keys to youroffice. Record the number of the key and other pertinentinformation. Make certain the original key is returned when theemployee leaves your company. If keys are lost, replace locksimmediately. Have your locksmith mark every office key "Do NotDuplicate" 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 businessin an unethical manner, your employees may believe its okay tosteal. For example, employees who see a business owner taking homeoffice supplies may believe its okay for them to do so as well.

Check references
Investigate every employee's prior work history before youoffer employment. Take extra precautions with anyone you hire whowill have financial responsibilities. Check references closely.Call previous employers to verify resume and applicationinformation. Invest time to make sure that applicants do not have arecord of stealing from previous employers.

Consider bonding
A fidelity bond is a form of insurance that protects your firm incases of employee theft. The bonds can be used to reimburse you forany established losses your firm is able to verify. Fidelity bondsare most commonly used to cover cash losses, but can also be usedto cover merchandise losses as well. An added bonus - some bondingcompanies will check an employee's background before bonding,which can help you weed out potential problem employees. Yourinsurance agent will be able to help you regarding cost andcoverage.

The viewsand opinions contained herein are not necessarily those of AmericanExpress and are intended as a reference and for informationalpurposes only. Please contact your attorney, accountant or otherbusiness professional for advice specific to yourbusiness.

Copyright © 2002 American Express Company. All RightsReserved

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