Some of the worst and most sickening conversations I’ve ever had with contractors is showing them where their employees are stealing from them. First it is disbelief that an employee could do this. Then anger. Then finally you put the procedures in place to make it harder to steal. Even with great procedures, someone who wants to embezzle will find a way around them. It’s too bad their creativity wasn’t put towards something positive for the business.
Here are 5 sneaky ways your employees can steal from you:
1. Accounts receivable aging report doesn’t match accounts receivable on the balance sheet.
2. Accounts payable aging report doesn’t match accounts payable on the balance sheet.
3. Payroll – an extra hour or two added or a small pay increase. You’re not likely to find it unless you are
looking for it. An owner thought that payroll for one person was too high. He asked for a payroll report
and saw the payroll clerk changing the hourly rate before printing it out.
4. Payroll taxes seem too high (or are negative). This is an easy way to add dollars each week to a
paycheck. Over a year they add up to thousands.
5. Dollar amounts in penalties and fines when you know you don’t have any or seemingly high overhead
expenses.
Here’s what to do:
Finish reading this Contractor Cents. Print out an aged payables report, aged receivables report, and balance sheet as of today. Make sure the numbers match. Print out a payroll report. Make sure the hourly rates or salaries are correct. Make sure time sheets match the payroll paid.
Look at payroll taxes on your balance sheet. Make sure they are not negative. If they are, find out why. Look at your overhead costs. Make sure they make sense. If your bookkeeper always has excuses about mistakes remember that a good bookkeeper is horrified when she or he makes a mistake. They pride themselves on producing accurate books. Really good bookkeepers drive you crazy with their preciseness. If there are always mistakes, then either you have an incompetent bookkeeper or an embezzler. I hope it is an incompetent bookkeeper.
If you need help analyzing your financial statements, My Internet program, Make your Financial Statements Fun and Sexy starts today (you can watch any time- you don’t have to attend the live sessions). Go to www.funfinancials.com or call 877-520-4321 to enroll.
