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Why are small businesses inclined to embezzlement?

On Behalf of | Mar 6, 2019 | Uncategorized

When you own a small business, you are investing in your livelihood and future. The last thing you want is to lose your investment through the capsizing of embezzlement. Anyone associated with your business may turn against what is in the best interest of its clients. When backs are turned, that person might take advantage of pre-established trust.

Sometimes, small businesses are accused of embezzlement when in fact they are innocent to the accusations formed against them. What is important to understand is that a recent survey showed 80 percent of embezzlement charges were made against small businesses. Why are small businesses more inclined to embezzle money?

Lack of accountability

Small business owners may find themselves in hot water when their business lacks vital accountability structures. Many businesses are not ready to handle the amount of power and trust given to them by their clients. When there is little to no accountability for how funds are managed, greed and dishonesty has an opportunity to take over. Even when the business employs family members and trusted friends, systems should be put in place to ensure money received is handled ethically on behalf of the client and the services rendered.

Employees going through hard times

A small business has a chance to avoid embezzlement when they know what to look out for from the beginning. Employers should not assume that young employees are more likely to commit fraud. In fact, studies have shown that the average age of a person charged with embezzlement is 49. Employers should look out for employees who are going through rough financial times in their personal lives. The inclination to commit a financial crime is often the result of a personal tragedy (e.g. divorce).

Embezzlement charges risk destroying the business you have worked hard to create. You do not want to taint your reputation in the community and be completely shut down when formal court charges are made against you. Do what you can to reduce the chances of fraud within your business and ensure everyone is accountable and understanding of the zero tolerance your business will have when it comes to greed and dishonesty.


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