PROTECTING THE BUSINESS AGAINST THIEVES

Articles In This Section:

· PROTECTING THE BUSINESS AGAINST THIEVES

· BUSINESSES, INTERNAL CHECKS YOU CAN USE

· BUSINESSES, WATCH FOR CASH FRAUDS

· TO AVOID STEALING OF MAIL RECEIPTS IN THE BUSINESS

· HOW TO STOP THIEVERY FROM PETTY CASH IN THE BUSINESS

· IN CASH HANDLING USE THESE PROVED METHODS FOR YOUR BUSINESS

· HOW BONDING EMPLOYEES HELPS FOR YOUR BUSINESS

· HOW TO PROTECT AGAINST ROBBERIES IN YOUR BUSINESS

· OTHER THINGS TO PROTECT YOUR BUSINESS WITH ARE

· HANDLING CONFIDENCE MEN IN THE BUSINESS

· CAUTIONS IN NEW YORK FOR YOUR BUSINESS

The prudence we have recommended to you in getting started in your own business is doubly emphasized when you deal with employees, suppliers and customers. Most embezzlements in business are by trusted employees. And in the vast number of these, the first step was taken because it was an easy way to "borrow" some money in order to gamble, live high or to pay the doctor and hospital costs for an ill wife. Your job is to make it difficult by removing the ease of temptation. Procedures you install at the beginning and careful periodic subsequent checkups will go a long way to prevent the fruits of your work being enjoyed by others. Obviously all the methods used by thieves cannot be enumerated. The inventiveness of thieves is ever new. But of this you can be sure—leaving an opening by carelessness or lack of foresight will be taken advantage of to your detriment. Here is a run-down of some of the more frequently used methods:

1. Kickbacks, split commissions and other bribings with suppliers of merchandise and similar deals with customers to give them a favored position—even not billing them for what they received.

2. Alteration of legitimate creditors' bills to get a new or added payment, which is then cashed by the cheater; or raising bills after they have been paid to get another check to be cashed.

3. Direct theft of material from the supply rooms or a store.

4. Selling business property (by-products, fixtures, machinery and automobiles, or even investments) and withholding the proceeds.

5. Raising the amount on checks given the employee for a legitimate purpose, then destroying the vouchers when returned by the bank.

6. Removing funds from petty cash, and inserting false vouchers to cover thefts.

7. Stealing money sent in by mail or "forgetting" to enter cash sent in by a customer as payment.

8. Stealing stamps, often in large quantities, charging them to legitimate expense, then selling them in the black market found in most cities. (Recently, a Wall Street clerk was found to have for years obtained stamps in "change" on the firm's check for postal meter charges. His stamps in "change" were a continuous and lucrative source of income for maintaining an extraordinarily high standard of living for a clerk.)

9. Making fake bills from imaginary sellers to secure payment for materials or services not delivered—then cashing the check.

10. Keeping cash paid by customers across the counter or in sales on the road.

11. Paying out salaries to imaginary, discharged or dead employees.

12. Making all sorts of adjustments and write-offs of customers' accounts, sometimes in cahoots with the customers. (A good example of this is the fraud involving the adjustment manager of a store. He started by putting through fictitious returns to cover alleged costs he was paying. The amounts were for the most part under $10. It was more difficult to detect them because they were so small. The total theft reached over $150,000 before he was finally caught.)

13. Lapping cash—using receipts of today to cover up yesterday's embezzlements, until the employee is hopelessly involved. All employees trusted with valuables should be bonded. If you do not take this precaution, you miss a valuable restraint. Bonding companies probably reduce frauds by 50 percent. Overintimacy sometimes invites collusion. It is essential to rotate employees now and then. "Trusted old people" cause more grief than the ones you don't trust. Many frauds are uncovered when the "hard working" employee who never takes a vacation is compelled to do so. Sometimes the hiring system goes wrong. It is best to engage employees through the personnel office rather than directly through shop foremen. That obviates "kickback" arrangements.