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Avoid Fraud With These Employee Theft Prevention Tips

Posted On: 03/19/2024 / Payroll Services
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Fraudulence & Theft Are Preventable

In a perfect world, business owners could concentrate solely on running their businesses efficiently. In the real world, though, business owners must also protect them from internal threats. Employee theft is a problem for businesses of all sizes and can cause even a great one to fall apart. As such, it’s important for all business owners to pay attention to basic employee theft prevention tips so that they’re able to stop these problems before they drive their businesses to ruin.

Employee theft prevention tips

Employee theft is a serious problem. In fact, about a quarter of all businesses report a loss of around a million dollars because of theft. Understanding how employee theft works and how to stop it is the only way to ensure that you’ll be able to keep your business safe.


What to look for

Theft comes in many different forms. When most people think of employee theft, they think of the direct theft of stock or money from the business. While cash and stock theft is a problem for many businesses, it’s certainly not the only type of theft with which a business must concern itself. In fact, other types of theft are far more insidious and can cause far more long-term damage.

A common type of theft is timesheet fraud or time theft, in which either an employee fraudulently claims hours worked or a payroll employee creates a fictitious worker to claim excess pay. Vendor theft, which can occur either due to vendor dishonesty or errors, can also be a major source of losses for a business. Being able to identify multiple types of theft is a key part of reducing employee theft.

Warning signs

If you’re concerned with prevention, looking at warning signs can be another of the more useful employee theft prevention tips. It’s a good idea to get educated on what theft looks like, but also what the signs of potential theft might be. This means learning to keep track of any financial discrepancies, any missing stock, and any operational changes that are out of the ordinary. It’s vital that you’re on the lookout for clues as to what might be occurring in your business.

It’s also a good idea to start looking at signs that an employee is or might be stealing. Employees who suddenly and radically change their hours, start disappearing from the floor, or who have major changes in attitude might be displaying red flags. Taking the time to understand these signs is one of the best ways to engage in fraud prevention.

Managing employees

Another of the more vital employee theft prevention tips is to practice better employee management. The goal should be to eliminate those situations that would allow theft to occur in the first place, usually through a better understanding of them. It might be a good idea to think of your business like a casino and to eliminate any situation in which a single employee could be left alone with the money. This not only increases the number of eyes on the money, but it prevents any single employee from being able to take advantage of the situation.


Good management can start before employees are even hired. One of the best tips is to conduct stricter employee screening to catch those employees with a history of dishonesty early on. You can also work to create a work environment that’s more friendly and has a higher sense of morale, which can in and of itself drive down the likelihood of employee theft.

Internal controls

Some of the best tools for reducing employee theft are those which are known as internal controls. Despite the name, these controls exist as something of an outside eye on the interactions between employee actions and your finances. These tools can be as simple as video cameras that focus on a till or as complex as biometric security locks on the safe, but they’re all very important to help deter fraudulent behavior, or catch it early if it does occur.

One of the most important employee theft prevention tips is to use an outside company to take care of your payroll. Payroll is an area in which losses can easily occur, especially when employees are tempted by a lack of oversight. Using the internal control of an outside processor helps to remove both temptation and access from the equation. Working with a good outside processor will help to reduce the potential for payroll theft and still allow you to get your payroll processed on time each pay period.

Communicate with employees

One of the best security practices that your company can undertake is to create an open and honest workplace. When your employees know that your business takes security seriously and that it does so for their benefit, it’s much easier to create a system that will benefit everyone. The easiest way to accomplish this is to keep the lines of communication open.


At a basic level, this does mean going over your theft policies during orientation. It also means keeping your employees up to date through meetings and seminars. Even taking the time to be open about things like the amount of money that theft costs your business can play a vital role in improving security. The goal should always be to ensure that employees understand their role in reducing losses and how doing so will ultimately benefit them.


Is your payroll secure?

Securing your payroll is a must for any business that wants to stay safe. Figuring out how to keep your information secure, though, is more than just a matter of knowing how to do the right things – it’s also a matter of understanding how to implement those policies correctly. If you’re curious to see how well you’re doing when it comes to keeping your payroll secure – or if you’re ready to figure out the next steps that you should take – make sure to visit PayTech’s website and to take the free payroll security quiz today.