Could you be a victim of employee fraud? Last week we saw that employee fraud is one of the main challenges that affects nearly all firms, with devastating effect on small enterprises.

With employee payroll being the highest single expense after the cost of production in most firms, employee fraud is the last straw that kills many enterprises.

Employee fraud comes in multiple ways that include stealing of actual goods, assets, money, claiming overtime for hours not worked, absence from work, claiming personal expenses or expenses not incurred, undercharging customers in exchange of favours, dishing out company items and marketing products free of charge to non-deserving people, friends and relatives.

Fraud has also been reported to be common among business partners and senior managers who collude with others for personal gains.

So how do you know whether you are being defrauded by your employees or business partners?

One of the key hindrances of fraud detection is trust. Most employers trust their partners or some staff so much that they don’t verify or check various documents or transactions.

The starting point is to develop an inquisitive habit. Test, verify and confirm everything regardless of who is handling the process. It is part of due diligence and sound business practice.

Cultivate a healthy relationship with your employees, customers and suppliers. They are your greatest allies in fraud detection and prevention. Some tip you when you are defrauded. However, also remember that it is not uncommon for the same employees, suppliers and customers to be accomplices of the perpetrator.

As an employer, it is important to watch lifestyle and behavioral changes that could give you a hint that all is not well.

If, for instance, an employee changes their lifestyle and seems to live larger than their income can support it is worthy investigating.

Of course they could be genuinely getting money from other sources, but verify, especially if it starts at some point in employment. Find out what has changed.

Most fraudsters in the workplace have queer habits like working odd hours, withholding information in order to be indispensable or preferring to do things alone and their way.

Team players turn into lone rangers who want independence, prefer to give out their personal emails and phone numbers to clients and keep their dealings secretive.

Also check how employees relate in the office. When two employees come too close or move too far from each other, find out what could be happening.

Employees who cannot be trusted to keep secrets are isolated while those who can help and keep their mouths shut become the darling of the perpetrator.

Another common sign that all is not well is engineered crises, mistakes and confusion in the office. For instances orders, requisitions, and various approvals are held and brought late with the sense of urgency causing confusion, hence some procedures are flouted or compromised to their advantage.


This article was first published in The Business Daily on January 22, 2019

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