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Business Tip of the Month

Business Tip
of the Month
For the month of Februrary 2003

Employee theft is a major business expense

All businesses, large and small, are subject to losses by employee theft. The theft can be subtle and difficult to identify, or it can be outright stealing of company assets. Maybe it is in the form of wasted time, petty theft of small company items, inventory converted to personal use, or maybe the theft and sale of company information.

An employee that wastes time is wasting company money. An hour a day of wasted time uses up one-eighth of the employee's salary. That means that a $40,000 a year employee is wasting $5,000 of the company's money every year.

Some employees feel it is okay to use company office supplies and tools for personal use. Maybe it is only a few office supplies here and there or a screwdriver or other small tool that makes it from the workplace to the employee's home. After all, rationalizes the errant employee, the company is making a lot of money, so a few stolen items couldn't hurt the business.

The outright theft of cash or the continued systematic theft of inventory can create a huge drain on the company profits. The perpetrator of this theft may be acting alone, but in some cases the theft may be collusion between two or more employees or between an employee and an outside vendor or delivery service.

Be especially vigilant if your employees are permitted to accept gifts from suppliers. Some unscrupulous vendors will use gifts to get the purchasing agent to buy larger quantities than needed or more expensive supplies than the company needs. A reasonable company policy is that all bonus items, discounts, rebates, etc., belong to the company and are not to be accepted by any employee, either on or off the premises.

Do you feel you have adequate safeguards to protect company assets? Do not rely on the integrity of the employees to protect the company from theft. In many cases, major theft involves a long-term, trusted employee. Your good employees will not be offended if you implement proper safeguards.

If you would like assistance with checking your internal controls and setting up proper safeguards, please give us a call.

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