By Josh Patrick 

NEW YORK (AdviceIQ) -- Companies lose around 5% of revenues each year to employee theft, according to an annual report of the Association of Certified Fraud Examiners. Small businesses are especially vulnerable because they lack proper controls. As a business owner, however much you trust your employees, you need basic strategies to reduce your risk of becoming a victim.

In the days I owned my vending company, cash controls were a big deal. It was almost like a game: Some of my employees found a way to steal, then I found a way to stop them. The game went round and round, and seemingly never ended.

This is a problem for any business. You don't have to have a cash business to have a theft problem. In fact, businesses that don't handle cash suffer some of the biggest embezzlements. Review your bookkeeping practices now by asking yourself these questions:

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Open your bank statements. You think your bookkeeper, who has worked for you for years, would never steal from you. Yet one day you look at your accounts and find several hundred thousand dollars are missing.

An easy way to make sure you don't get these nasty surprises is for you to open your banks statements and look through them before sending them to your bookkeeper. If people in your company know you look, they are much less likely to steal from you.

Balance your credit cards each month. Someone who gets ahold of your company credit card may use it for personal purchases. If you put a significant amount of your company's purchases through credit cards, you need to make sure you balance the charges every month. With lots of transactions, it's easy to miss an unauthorized charge.

Sign your checks. One of the dumbest things I ever see in small businesses is auto-signers for checks. Sign your own checks. There is no reason not to. It takes you no more than 10 minutes, even if you have 50 checks a week. If a check looks out of place, you notice it a lot faster than if someone else signs for you. Also, don't get a signature stamp for checks. Having one doesn't make you look like a big company; it just increases the chances of employee theft.

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Control your petty cash fund. Businesses often keep a small amount of cash on hand to cover minor expenditures. If you do, you need to balance receipts. Taking a few dollars here and there seems harmless, but before long, your entire cash fund is gone. Big thefts start out small. Keeping control of minor outlays might save you from having to deal with a big embezzlement.

Watch who's handling agreements with suppliers and customers. There are also more sophisticated ways to steal, such as fabricating vendors and clients or having secret arrangement with them. For example, an employee has a supplier write a check for goods that never arrive, or steals your goods and sells at a discount to your customers. Don't say "That will never happen to me." Just pay a little more attention and avoid regret.

At the end of the day, theft control is just using common sense. It's not about treating everyone as a criminal, but about having precautions in place to keep honest people honest.

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-- By Josh Patrick, CFP, founding principal of Stage 2 Planning Partners in South Burlington, Vt. He contributes to the New York Times' "You're the Boss" blog and works with owners of privately held businesses helping them create business and personal value. You can learn more about his objective review process at his website.

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