To Catch a Thief

If your business includes desirable inventory and supplies, take steps to protect them. Install a burglar alarm that automatically notifies police when it is tripped. If your goods are at particular risk, consider adding security guards, video cameras, fencing, bulletproof glass, and gates. Train your employees to lock doors, and limit the number of people who have physical access to the goods you want to protect. “If people reduce and control access, they solve 85 percent of their problem,” Salmans says.

It’s particularly important to reduce access to property that’s left at a job site overnight. Western National Mutual suggests making sure that sites are well lit, and that tools and other valuables are in a locked job trailer at night. “Our loss-control folks encourage people to back a vehicle up against the door of a job trailer so it’s harder to get in,” Manley says. Frequent inspections can quickly expose areas on the job site that need more protection.

Build firewalls into your computer system and encrypt your data to make hacking in more difficult. Change passwords often, log off computer systems when you’re not using them, and consider hiring a consultant to find the weaknesses in your electronic fortress.

Put more than one person in charge of company money. Require two signatures for checks, particularly those for larger amounts. “Make sure that, if someone has the authority to deposit money, they don’t also have the authority to withdraw,” says RJF’s Johnson. Writing checks and balancing the books should be separate jobs, performed by different people. Perform regular inventory spot checks and monthly financial audits to catch problems before they grow. Check that vendors exist and have done the work for which they’re billing.

To protect your own and client companies, consider purchasing an employee dishonesty bond, which protects your company from losses such as theft, computer fraud, or forgery. “Employers often feel insulted when we bring that up, because they trust their employees,” Johnson says. Depending on the number of employees a firm has, the coverage is relatively inexpensive—about $400 a year for $50,000 in protection, he estimates.

Be aware that trusted employees with long company tenures are the most common embezzlers. “It’s oftentimes someone who’s in the position of experience and responsibility,” Meiners says. Pay attention to changes in personality and life circumstances, and be particularly careful when adding staff. “You might say, ‘I know this person—they would never steal from me.’ That might be true, but what if a new person comes into the job?” Meiners says. “The process is the same, but the person is new and perhaps not as trusted.” Background checks may be an appropriate way to find out more about a job applicant who will handle money.