In Australia, employee fraud costs businesses an estimated $8.5 billion annually.
It might also surprise you to know that employees carry out 80 per cent of workplace crime, while 85 per cent of respondents in a recent survey said they would commit fraud if the ‘right’ circumstances were to arise.
Perhaps even more alarming than these figures is that only 5 per cent of Australian businesses have the right insurance cover to protect them against any financial losses that occur as a result of employee fraud.
So, what can you do to protect your business from fraudulent employees?
Employee fraud is any dishonest act committed by an employee that negatively impacts the business they’re employed by. It can include payment fraud, procurement fraud, or even subsistence fraud.
When hiring new staff members, especially if they will have access to sensitive information or your businesses financials, make sure you do a background check.
If you create a friendly, collaborative working environment, where the bosses lead by example, your staff will be less inclined to commit fraud. It all comes down to establishing respect. Studies have also shown that people respond positively to a clear organisational structure, fair employment practices, clear communication and positive recognition for a job well done.
Regardless of the type of business you’re operating, always make sure workplace procedures are documented and every employee is trained according to the manual, and has access to it if needed. Your employee manual should also clearly state the workplace’s code of conduct and that there will be ‘zero tolerance’ for any fraudulent behaviour.
It’s also advisable that you undertake regular audits, and hire an external company or person to come in and check your books. This may be an extra expense, but if they can catch any acts of fraud early on, you’ll save money in the long-term.
Once you’ve taken care hiring and training your employees, the next best thing you can do is take precautionary measures, to ensure your business is protected if your preventative measures ever fail. This is where business insurance that includes employee fraud is a must!
As well as having adequate insurance, if you suspect an employee is committing fraud or being dishonest, you could handle it internally, however, if you’re not equipped to do so, bring in a specialist third party.
One of the most important things to consider is that you should never accuse someone of doing something dishonest if you don’t have any proof, this could lead to the employee taking legal action against you.
Unfortunately, the sad reality of operating a business means you will always face a number of risks, including employee fraud. This means that no matter how careful you are, there’s always a chance that a dishonest employee will find a work around.
To make sure your business is protected in the event something goes wrong, talk to Sydney Insurance Brokers, to see which type of business insurance is right for you.