Employee theft, it’s a nasty phrase and a nasty experience.
I read a post on LinkedIn recently posted by a hard-working SME business owner who had a senior and trusted employee who stole from the business over a period of several months.
The employee was employed as the Materials Manager, and he would order materials from suppliers and then have the delivery of goods diverted to his home address before them selling them for cash. His employer was then paying the supplier invoices despite not receiving the goods. The direct cost to the business financially was in the tens of thousands of pounds.
It’s a dreadful story but unfortunately, it’s not uncommon for employees to steal from their employers. Not all thieves wear a balaclava and carry a swag bag.
Types of Employee Theft
I have witnessed and managed several cases of theft in my accounting roles including:
- A director who employed his son who forged and cashed company cheques
- A son who was employed by his self-employed who stole to fund his drug habit
- A Head Chef who stole cash and stock
- A Senior manager who stole and sold FMCG stock
- An accounts employee who supplied data to a third party
- Bar staff stealing cash from the till
- A night shift manager stealing raw materials
So, business theft takes many forms, from cash and finished goods to data and raw materials. To reduce the risk of theft from your business you must have robust procedures in place and test them. As horrible as it sounds, to a degree you have to think like a thief to catch a thief.
Bookkeeping & Management Accounts
In the case of the materials manager matching and cross-referencing purchase orders (PO’s) to delivery notes (DN’s), to goods received notes (GRN’s) and purchase invoices (PI’s) would have highlighted this matter at an early stage. A check and cross reference of the paperwork and the delivery address would have identified this.
Monthly management accounts with an inventory check would certainly highlight it if the bookkeeping process didn’t.
It’s easy to say the materials manager would have stolen anyway as it was in his nature but:
- It would have been much harder for him to do so
- He would have been caught earlier
- The damage would have been significantly reduced
- He may have taken the view it was to much of a risk
The good news in this story is the thief was convicted and imprisoned, and the business owner has taken a positive attitude and is looking forward.
Sage Accounting Software
Bottom line is, as much as you trust your employees don’t make it easy for theft to occur. Simple robust procedures, good bookkeeping and accounting and good software significantly reduce the risk, costs, and impact of theft.
I would recommend Sage Accounting software with its excellent integrated Sales Order, Purchase Order and Stock modules.