If you don’t have financial controls in place, it’s not a question of whether people will steal from you, but when. The best way to avoid the hassles and headaches of property and financial losses is to prevent those losses from ever happening.
As the old adage says, an ounce of prevention is worth a pound of cure. Here are the five ounces of protection you should have to protect your property—physical, intellectual, and financial. Not even one has anything to do with buying insurance.
They do give you the best possible protection for some of your biggest risks by preventing loss in the first place.
- Your best “insurance” against fire is a building with sprinklers. Few companies recover after a major fire; starting again is difficult in so many ways.
- Your best “insurance” against losing one of your most crucial resources—information—is off–site, cloud-based backup. Whether it's inventory information, customer lists, ordering plans, or schedules, losing information can be a terrible disruption to your business.
- Your best “insurance” against loss of intellectual property is to use employee intellectual property agreements. These are designed to ensure that what employees learn about your company’s intellectual property won’t accompany them when they go home or leave your employment. You don’t need to train your future competitors.
- Your best “insurance” against theft is a security system that is monitored by an alarm company’s central station.
- Your best “insurance” against embezzlement is maintaining comprehensive operating systems that all accountants recommend for prevention.
This item is the one most ignored by companies. The profits of small businesses are substantially cut each year by internal theft. Employee theft accounts for at least 30 percent of the losses incurred. Forgeries, embezzlements, and manipulations by trusted employees siphon off sums that are sometimes large enough to drive even long-established firms into bankruptcy.
A full fraud prevention audit should be performed annually.