Employee theft is a soul destroying and painful occurrence in many businesses – especially when the theft is carried out by a long term trusted team member.
However painful the topic of employee theft is – it is important all business owners are aware of this risk – and how to prevent it.
For this reason I have decided to include a post from inside my “Profit Club – Members Forum” – where a very sharp health business owner (and long term member) found himself on the wrong side of this most difficult situation.
Here is the post – learn from his story:
Dear Paul.
I recently had the sickening experience of finding out that a previous employee had stolen close to $40,000 from my business.
I wanted to tell my story and share it with other Profit Club members, so hopefully they can learn from my experience and avoid a repeat.
The employee was my previous practice manager who was also my book-keeper.
The employee had left at the end of 2015 and it wasn’t until mid-2016 that my new book-keeper (my sister) found some irregularities with our banking.
We then conducted a full audit across both our practices which cost me about $7500.
Our practice software has some good features, although its accounting section is quite poor and antiquated. This means any deposits have to be manually entered into our accounting software – MYOB.
Once all the deposits are entered, the book-keeper will reconcile these deposits against the bank statement to make sure they match up.
Well, this is what is supposed to happen, but wasn’t.
At the completion of the audit, it was found that some of the cash takings were never being deposited and since this employee was also the book-keeper, they simply never manually entered the deposits from our practice software but simply entered the data based on what was going into the bank when she received the bank statement.
This happened consistently and regularly over about 5 years.
Be this a lesson to all other practice owners.
Don’t think being a good employer and looking after your staff will prevent theft from occurring.
It doesn’t matter that you might invite them to your house for Christmas or even pay for a family holiday (as I did) and think this will make any difference to staff loyalty.
If you are naive and trusting, this WILL probably happen to you.
You MUST put steps in place to prevent this happening.
So what have I done?
(1) I hired an external book-keeper who has set-up some great systems including bank feeds that has not only saved me heaps of employee hours in data entering but also checks if everything is entered correctly.
(2) My sister now does the payroll each fortnight. I ask her now to check that all cash deposits in our PMS have been banked. Payroll is delayed until the money is banked. If you don’t have a family member doing the payroll, either do it yourself or get the external book-keeper to do it.
(3) Make sure the person doing the banking is NOT the same as the one doing the book-keeping. This way they can hopefully check up on each other.
(4) Each payroll we do an audit of our PMS to see if any cash transactions are deleted. This can alert us to any employees taking a cash deposit and then simply deleting the deposit on the PMS and putting the cash in their pocket.
(5) We tell all staff about our new procedures so they know we are checking things and they will get caught if they try to steal.
Fingers crossed all seems to be going well since implementing these procedures.
This experience has really hurt me and I have had a few teary moments about it all.
Only last week we got our money back as I threatened a civil suit and to go to the police.
My good friend, a senior public prosecutor, says that had I gone to the police, the offender probably would have served a custodial sentence given the amount stolen and the consistent nature.
I didn’t bother with this avenue due to the predicted stress and time involved.
I am happy just to get my money back and move on.
However, be this a word of caution – most employers DON’T get their money back.
Paul, I am happy for you to share this with others through your newsletters – because if it does happen, you really do lose faith in humanity and it hurts.
Paul again
WOW
The lessons in this story should be ringing loud and clear for all health business owners:
– put in double check systems in place for all things banking and cash related
– NEVER assume this won’t happen to you.
– Your team deserve to be protected by great systems – double checked data and payment entry.
– This owner was so lucky to get their money back – as I know of countless business owners who have uncovered fraud in their businesses and have not been able to recover a cent.
I hope this sad tale helps you in your health business.
Be smart and don’t put yourself in this position.
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Best Wishes
Paul Wright