Every day, your business accepts money…cash, checks and credit cards. All of these can be an issue, but cash is the biggest issue of all. You know that $25 (cash) copay that was just received – where did it go? Did it make it to your cash drawer, or your employee’s pocket?
In a survey done with practice managers, nearly 45% of them report some degree of cash taken from a practice. Lest you think that embezzlement is limited to health care practices think again. The US Department of Commerce estimates that embezzlement costs US business an estimated $500 billion annually. Yes, that’s “B” as in billion.
Let’s look at seven ways to minimize the risk of this happening to you and your business.
- One is a dangerous number. One person accepting money, logging the payment, making the bank deposit and reconciling the books at the end of the day/month is asking for trouble. If at all possible, divide the process up between staff members and yourself. Monitor closely.
- Internal audits should be done on a regular basis and on a “surprise” as needed basis. Having this as part of your standard operating procedure may cause the less than honest person to think twice about proceeding and getting caught.
- Mandatory vacations can help flush out the problem. Often times the person engaged in embezzlement will avoid going on vacation for two reasons…they want to have continued access to the cash and if someone fills in for them, there is a greater chance of being found out. If you find that you’ve got greater cash flow in your business when someone is on vacation, dig deeper.
- Cross train staff and mix up assignments from time to time. The guilty person will avoid help and want to avoid having someone see what they are doing in their position.
- Safeguard business credit cards. Think and think again who has access to business credit and debit cards, and who can sign and call in orders as well as sign for checks. Make sure you have procedures in place to make this a multi-step procedure.
- Who’s managing the books? Are fake bills from fake vendors just written off? Are expenses being written? Are patients and their insurance companies really being billed? You may want your CPA to do a quarterly audit of the books, just to be sure.
- Most importantly, before you hire do a background check. How did it go at their previous employment? Did the company have any concerns? If it’s hard to get direct information, listen between the lines. Make sure you also do a criminal check.
When it comes to office embezzlement – everyone is potentially a suspect – even that long time trusted employee. Protecting your business has nothing to do with who you like or even trust. Good policies and procedures, including safeguards and audits will not only protect your practice and your employees.
Share with your colleagues the tips and strategies you use to protect your business from practice embezzlement below.