Why Embezzlement Most Often Occurs at Small Businesses and How to Prevent It From Happening to You
Guest writer: Ken S. Springer
The latest statistics on fraud should send a big jolt of fear into small business owners. According to a 2016 embezzlement survey by HISCOX, a specialty insurance company, 80 percent of embezzlements occurred at small businesses — defined as those with less than 150 employees — and 30 percent of embezzlements involved a loss of more than $500,000.
One major reason scammers target small businesses is because they often lack checks and balances. Typically, a company starts out with employees who are family and friends, and everyone has access to sensitive client information, inventory and sometimes even the checkbook. You may say, that won’t happen at my company — they all love working here — but it does. In fact, 30 percent of the embezzlements occurred because there were no checks and balances at all.
One major reason scammers target small businesses is because they often lack checks and balances. Typically, a company starts out with employees who are family and friends, and everyone has access to sensitive client information, inventory and sometimes even the checkbook. You may say, that won’t happen at my company — they all love working here — but it does. In fact, 30 percent of the embezzlements occurred because there were no checks and balances at all.