If you’re like most business owners, you already know that embezzlement is a serious crime with the potential to wreak substantial havoc on your business. To make matters worse, this activity frequently goes unnoticed until the damage is significant. Fortunately, business owners do have a line of defense when it comes to financial crimes committed against them by employees. It all starts with awareness of possible early warning signs so that you can circumvent devastating financial losses. Following are six signs that an employee may be embezzling funds that every business owner or manager needs to know about:
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1- Unusual Working Hours
Employees who are embezzling often keep irregular working hours. For instance, they may come in early, remain late, or otherwise be in the office during times when fewer people are around to observe their actions. If you notice a pattern of keeping unusual hours without a clear reason, it could mean that the employee is siphoning money from company funds.
2- Reluctance to Take Time Off
Employees who are embezzling frequently exhibit an unusual reluctance to take paid time off, such as vacation or sick days. Their physical presence in the office is typically necessary for them to be able to conceal their fraudulent activities.
3- Unexplained Lifestyle Changes
A sudden and noticeable change in an employee’s financial status, such as expensive purchases or an upgraded lifestyle, can be a sign that the person is stealing from your company. Although there are definitely legitimate reasons for changes in personal finance, it’s important to consider them in the presence of other potential warning signs.
4- Inconsistent Financial Records
Frequent errors in financial record-keeping, missing documents, and other inconsistencies indicate the possibility of embezzlement. Be particularly alert for anything that appears falsified or altered as well as unusual patterns in accounting records.
5- Protective of Responsibilities
Those who are embezzling are often overly protective of their work responsibilities — after all, they don’t want anyone in the office to catch on to what they’re doing. For instance, they might insist on handling certain financial tasks themselves or refuse to provide access to any records and accounts that they manage. This is an attempt to maintain control and minimize the risk of detection.
6- Changes in Behavior
As you can imagine, embezzlement comes with a strong risk of being caught, and the consequences can be substantial. Employees engaged in illicit activities are under a lot of stress, which leads to noticeable changes in their behavior. They may become increasingly secretive, show signs of anxiety, or show uncharacteristic defensiveness. On the other hand, they overcompensate by showing usually high levels of confidence, and may even believe that they are too clever to be caught.
Keep in mind that early detection is essential to safeguarding your business from the damage that embezzlement can cause. Remain vigilant, recognize the subtle signs of potential embezzlement, and encourage a culture of transparency and accountability in your workplace. Take immediate legal action if you suspect that an employee is embezzling from company funds.