Believe it or not, many companies provide credit cards to employees and then never monitor what is being charged. I know this because I was an accountant working for a couple of those companies. Not surprisingly, one of the companies ended up in bankruptcy despite my repeated attempts to inform management. They simply chose to look the other way and ignore outrageous spending habits. Why? Indispensable employees in some cases, but most often it was poor management.
I have seen everything from employees making $100 withdrawals at casinos, to managers taking extravagant lunches on a daily basis, to employees using company credit cards to foot the bill for their long weekend, out-of-town dates. Once again, why does management have such a hard time confronting employees? Had it been one of my employees, reprimand — or worse would have taken place immediately.
It is imperative that business owners play an active role in the on-going administration of their finances. I have so many clients that have shared with me their horror stories about how their bookkeepers and/or office managers have embezzled thousands of dollars from them. How did this happen? In every single case, the employer stated that they trusted their staff implicitly. Trust is a good thing"?¦lack of involvement in the most critical area of your business is not.
Minimally, you should be reviewing your credit card statements, petty cash and telephone (including land-line and cellular) bills on a monthly basis. You can probably review a quarterly office supply ledger to monitor usage"?¦.oftentimes employees go overboard when they are allowed free reign to small purchases (that add up).
If you are concerned about embezzlement, look very closely at your outside services and loans. One way employees embezzle is to set up fake services, for instance, a janitorial supply service. They create a vendor and write checks to that vendor and then deposit the monies into their own accounts. They know no one is monitoring janitorial supplies so it is an easy method of stealing money.
This works the same way with falsified loans. It is very easy to create a loan in your accounting ledger that does not exist and then apply payments against it, especially if the owner is never taking time out to review the financial statements"?¦and by the time the embezzlement is noticed, it will most likely be too late to do anything other than press charges. It is almost guaranteed that no money will ever be returned. I know this first-hand because a friend of mine is currently re-creating financial documents for a multi-million dollar lawsuit, where many investors are involved. Once again, he had worked very closely for many years with these people and felt no reason to ever question their trust.
Don´t let this happen to you. Get involved. Stay involved. You may very well find that your profits increase dramatically.
"Where large sums of money are concerned, it is advisable to trust nobody." ~ Agatha Christie