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Is business fraud happening right under your nose?

On Behalf of | Sep 30, 2022 | Business Law Litigation

When you are running a small business, you have many things to keep track of, including clients and vendors, government compliance and day-to-day operations. It is always a relief to have trustworthy employees to whom you can delegate some of these critical tasks.

Unfortunately, some Florida business owners learn too late that the employees they hire to handle financial matters are not as upright as they seemed. Even a small business with limited resources is not immune from fraud — often perpetrated by the very employees a business owner trusts to protect the company. Would you recognize the signs that someone in your business is committing fraud? Would you know what to do about it?

See the red flags

Adding ghost employees to the payroll, duplicating payments to vendors and raising vendor expenses as a percentage of sales are just a few examples of fraud an employee may commit. If you miss these signs or shrug them off, you may unwittingly embolden the employee to take more and more from your business. It is smart to recognize the signs of fraud, including:

  • An accountant who refuses to take time off or allow others to access the records
  • A bookkeeper who insists on managing the accounts on paper instead of using reliable software
  • Cash transactions that your financial manager has not reconciled in more than 30 days
  • Multiple payments to vendors or payments to vendors you do not recognize
  • Frequent shortfalls in inventory
  • Missing cash
  • Checks or charges to the company credit card that you cannot account for

Ideally, you have safeguards in place to prevent fraud from within your company. The tragic fact is that many business owners will overlook signs that someone is stealing from them because they do not want to admit that someone they have trusted is defrauding them. When they do face the facts, business owners may discover that thousands of dollars in profits have disappeared.

What’s next for your company?

Small business owners who are victims of fraud may simply want their money back. The thought of sinking even more resources into a prolonged lawsuit or criminal case is not always the most attractive to a business owner who is likely reeling after discovering the betrayal of a trusted employee. One alternate option is to negotiate a repayment plan in exchange for not pressing criminal charges against the fraudster.

Nevertheless, a more aggressive course of action might be appropriate for your situation. In either case, you will want experienced legal advisors who understand your unique situation and can assist you in getting your business back on track to success.

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