Protecting Your Business Against Embezzlement

This article was written by Pam Newman of Entrepreneur.com

Ever read those stories about embezzlement and think to yourself, "Wow! What fools. How could they not have known their employee was stealing money from them?" Unfortunately, situations like this happen all too often, and most of the time, the crime's committed by someone you'd never suspect. While we all like to think the best of our employees, it's critical that you be very savvy about the way you handle your money. Don't be unnecessarily irresponsible; if you don't have proper controls in place, you're just inviting trouble.

So what should you do to ensure that you have controls in place to minimize the opportunity for embezzlement at your company? Here are some tips:

1. Don't leave cash lying around in an unprotected spot. It can easily disappear, and you don't want to tempt people by being careless.

2. Don't use signature stamps for checks. They're too easy to misuse. Sign the checks yourself with a pen.

3. Minimize the number of employees who have signature authority on your bank account. Too many hands in the pot can lead to disaster.

4. Make deposits nightly so excess funds aren't left on-site.

5. Do cross-training so multiple people know multiple functions. This means multiple people will have the ability to do audits on one another's work to ensure that processes are followed. It also minimizes the chance of theft. You may also want to pull in your outside accountant to do spot checks from time to time.

6. Have separate check cards for each individual, if you choose to authorize check cards. You want to know exactly who's spending what. Remember, embezzlement isn't just about taking cash. Employees could misuse the cards to purchase personal items.