Most entrepreneurs take great measures to protect their investment from third parties, but not from their own employees. This is bad news because employee theft or fraud can cost you a lot of money if you don't take the right precautions. Here are some of the precautions to take to avoid employee fraud or theft.

Apply a 'Segregation of Duties' Policy

A 'segregation of duties' policy ensures that one employee doesn't handle multiple sensitive duties. It is particularly advisable for duties that are linked together. If the same employee handles multiple such duties, it gives them the opportunity to steal without getting discovered. For example, it shouldn't be that the same employee who receives cash sales is the one who tallies them and banks the cash. Dividing up the duties is a good way of preventing theft because the other employees may spot the theft.

Insist On Multiple Approvals for Large Expenditures

Another trick is to ensure that more than one employee signs the check whenever an expensive expenditure is to be made. For example, you can have a policy that any expenditure over $1,000 must be signed by the treasurer and accountant or accountant and purchase manager. This helps because the more people are involved in a transaction, the less likely it is to involve fraud. Leaving a single person to handle expensive expenditures may be tempting to them.

Conduct Background Checks before Hiring

Most companies would be able to prevent employee fraud if they performed more diligent background checks on their potential hires. If an employee has a criminal history or has been let go from another company due to fraud, they are more likely to commit the same crimes in their new company than it is for an employee with a clean criminal past to do the same. Therefore, institute a thorough background check as one of your hiring policies and ensure it is followed to the letter.

Conduct Random Checks

Lastly, you can also prevent employee fraud or theft by conducting random checks throughout the year; make sure the checks are truly random for them to be effective. This can work in your favor in several ways; first, it may help you catch fraudulent activities in their infancy before the losses become too much. Secondly, it may instill fear in your employees who would have been tempted to steal from you without the checks.

Hopefully, the above tips will help your business avoid employee theft. However, you should still have employee theft coverage insurance to shield you from the losses you would experience if the worst happens and your employees still from you. For more information, contact a company like Insurance Unlimited.