There’s no shortage of things to do when forming a business. Choosing a location or office, drafting a business plan, picking a business model and securing financing are the big ones to get started, but there are infinite small steps throughout the process that will ultimately guide how successful a business becomes.
Which employees are hired and how they behave is vital to any brand, whether in customer service, business-to-business operations or manufacturing. Employee skills are paramount, but so is their integrity. One bad apple can be costly and it’s up to management to find ways to reduce and respond to unethical behavior.
Four common types of fraud
A recent article, Accounting Today looks at the growth of artificial intelligence software and its ability to identify fraud that would previously take an astute accountant and valuable company time. While the article emphasizes software’s benefit, it’s worth taking a moment just to review the different ways that employees take unsanctioned perks on the company dime. It’s always best to identify a problem before it starts.
- Mislabeling expenses – When a business expense is reported, the receipt needs to match the description.
- Subtle monetary transfers – A form of nickel-and-diming, this is when an individual buys a small item for personal use but reports it as a work cost.
- Inappropriate upgrades – When an upgrade is superficial and violates company policy, such as renting a convertible for work travel instead of a commuter sedan.
- Expensing “miscellaneous” items – This is a valid expense field, but its openness is vulnerable to fraud. By closely monitoring this field, a business can catch fraud in its early stages and reduce risk by carefully vetting its use.
Clear rules and a firm response
Employee fraud costs businesses $50 billion each year. It’s clear that money could benefit your company and employee abuse should not be an expected loss. While careful hiring and a strong human relations policy will get a business started on minimizing employee costs, it’s vital that company guidelines and the employee handbook are clear and firm in their policies and disciplinary action.
Business and labor laws in Texas are complex and vary by the industry. It’s wise to consult with a business attorney to make sure that any measures you take to protect your business comply with state and federal law while also protecting your bottom line.