In this day of electronic banking, the use of electronic payment methods has become an area easily abused by unscrupulous employees. However, many of the old “tried and true” prevention techniques still work. Stay diligent with your office oversight by implementing these tips in your business to reduce the chances of loss.
1. Make sure your bank requires two individuals to approve a bank payment (Check/ACH/Wire Transfer) - The Owner and/or a trusted family member that works in the business is preferred as the second approver.
2. Implement a Positive Pay system with your bank. Most banks today have systems where checks and other payments are pre-approved before they clear the bank so unknown items will not be processed when submitted for payment.
3. Open the mail (or the e-mail) from the bank, especially the monthly bank statements. Have the corporate bank statements mailed to your home, so your office knows that you will be the first one to open and review the monthly bank activity.
4. Segregate as many duties as possible within your office when it comes to access to cash. Employees with direct access to cash should not also have the ability to record accounting transactions.
5. Periodically review the payroll. Make sure there are no “phantom employees’ and that hourly rates and hours worked appear reasonable.
6. All employees with direct access to cash should be bonded.
7. Make sure your employee theft/embezzlement insurance coverage is sufficient. Premiums are relatively low for this type of coverage and can really pay large benefits if a loss is discovered.