A trusted bookkeeper had been with the company for years.
 
One day, she started siphoning off small amounts of money. Over twelve years, she managed to steal $50,000.
 
The owner had always held this person in high regard, so she chose not to press charges. The bookkeeper was quietly dismissed, and the theft was never officially recorded.
This story happens more often than business owners want to think about.
 
But embezzlement is often an overlooked threat that can devastate small businesses.
 
In fact, it’s one of the leading causes of business failures, responsible for nearly a third of all closures.
 
This is a problem we can’t afford to ignore.
 
I don’t want your business to become a statistic. So what can you do to protect it from this kind of internal theft?
 
The key is to "trust but verify."
 
Here are four ways to do that.
 

1. Process all transactions through a checking account.

 
Run all receipts and disbursements through a checking account. This will create an independent record of every transaction. You can’t tamper with this record maintained by the bank, and it provides a solid foundation for reconciling your books.
 

2. Implement separation of duties.

 
One of the most effective ways to prevent fraud within your company is to divide responsibilities. No single person should have control over every step of a financial transaction. For instance, the person who sets up a vendor shouldn’t be the same person who approves payments and writes the checks.
 

3. Review statements and reconciliations regularly.

 
Ensure that someone other than the person recording transactions reviews your bank and credit card statements, as well as monthly reconciliations. Scrutinize any transactions that seem out of the ordinary, such as ATM withdrawals or unusual charges on the company card.
 

4. Conduct periodic reviews by a third party.

 
Have an unrelated third party with accounting expertise review your books regularly. This extra set of eyes can catch anomalies that individuals too close to the day-to-day operations might overlook.
 
If you suspect your business could benefit from a more rigorous review of your finances, we’re here to help.
 
A proactive approach can prevent financial losses and give you peace of mind. Don’t wait until it’s too late—reach out to us for a second opinion on your books.
 
Your business’s future could depend on it.