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VIENNA, Va. ( MainStreet) -- Small-business owners have enough to worry about. The last thing they need to deal with is an employee gone rogue.
Unfortunately, these things do happen, and not just to large companies such as
UBS(UBS), where 31-year-old equities trader Kweku Adoboli made a series of trades in September that cost the investment house roughly $2 billion.
Business worldwide lose 5% of annual revenue to fraud, a study says -- and small businesses are particularly at risk.
Small businesses are particularly vulnerable, experts say, because they typically lack anti-fraud controls for even the most common schemes -- check tampering and fraudulent billing.
Today's economy makes matters even worse. Theft or fraud by an employee could hit a small company when it is already struggling to stay afloat -- potentially knocking it out of business altogether.
According to a report last year by the Association of Certified Fraud Examiners, organizations worldwide lose 5% of annual revenue to fraud. Based on the 2009 gross world product, fraud losses totaled $2.9 trillion, with the median loss in an occupational fraud case hitting $160,000 and nearly 25% of fraud cases involving losses of at least $1 million.
BookKeeping Express provides virtual professional bookkeeping services for small businesses, advertising a benefit of being an outsourced service: The company's certified bookkeepers pick up on employee theft and can be helpful in the case of "discovery and recuperation."
CEO Greg Jones answered a few questions for us about how small businesses can protect themselves from rogue employees.
Why are small businesses so vulnerable? Jones: In some cases it starts with the hiring phase, where the business owner maybe has not in his or her past had to do much hiring and doesn't have a formal process in place to bring people on board. Many people are wearing many hats due to the [company's] size. People are focused on day-to-day chores and nobody's structuring process and procedure, HR policies and things that keep people in line. If you don't have that, what typically happens is everybody is running around doing things the way they feel is the best way to do things, and that may not be the best way.