Theft, fraud, embezzlement, thieving, larceny, appropriation, swindling—have you been hearing a lot of these terms lately? Sadly, a quick glance at any major news outlet will show you that bookkeeper theft has been rampant this past year, resulting in dozens of cases of fraud. The idea of a bookkeeper stealing money from you is almost inconceivable for many business owners. After all, you probably have a personal relationship with this person. You've trusted them to watch over the single most important part of your business. If money is going ‘out the back door’ due to bookkeeper theft, you will have very little chance of success in the long term. Unfortunately, this kind of theft is something that happens from time to time, so you need to pay close attention to make sure you don’t become a victim. Do you know what to look for? Here are 4 signs that can help you determine if your bookkeeper is stealing from you...
Watching for these major red flags can help clear the way for you to take steps as needed
#1 – The Books Aren't Adding Up
Okay, so this is a fairly obvious point, but it needs to be made anyway. If you are noticing that there are an odd number of adjustments within your accounting records, it might be time to take a closer look. The occasional adjustment is normal and to be expected, but a pattern of this kind of activity without proper explanation is a sign of a serious problem. Why are the books not adding up at the end of the day? Where are the problems coming from? Are there issues with your financial statements? You might need to ask some hard questions, but those are important questions to ask. Look out for bookkeepers who take records home, or prefers to work in the office when no one is around. Also take note of frequent "mistakes" such as misplacing of payroll receipts, deposit records, supplier letters, etc...
#2- High Level of Secrecy or Change in Habits
Your bookkeeper should be the most open person within your business. He or she should be happy to show you anything and everything within the accounting software, at all times. If there is any sense of secrecy within the system, or any reluctance to show you the books, you should become concerned. As the owner or general manager of the business, there is no valid reason that you shouldn’t be able to see the books whenever you wish. A bookkeeper stealing from the company will likely be reluctant to turn over information, so be skeptical of anyone who is closely guarding the books. If your bookkeeper, office admin, or any colleague/employee with access to your company's books or property suddenly exhibits new habits, like coming into work on weekend or working longer hours, it's important to take notice. These red flags may be reason enough to watch the books and the employee a bit more closely. You might notice the bookkeeper wants to micromanage or control all of the financial functions. For example, if they are the only employee who make bill entries, there should be someone else applying the payments. This ensures a separation of duties and creates a system of internal controls.
#3 – Cash Flow Takes a Dive
If your business has been running at the same level as it usually does, but cash flow has suddenly dipped, you might want to look closer into your daily operations. Is there really less cash coming into the business, or is it ‘leaking’ out somewhere along the way? Most businesses generate relatively predictable levels of cash based on how many customers are coming through the door—or how many invoices are being sent out—so it shouldn’t take much effort to uncover a problem. Keep your finger on the pulse by doing random checks on your books to make sure things are trending normally. Also, it's worth making note of your bookkeepers personal changes- for example, are the suddenly living beyond their typical means? If your cashflow has dipped and the bookkeeper has suddenly purchased a nice new car- it's time to take a closer look. Alcohol or drug abuse is another major red flag- unfortunately those suffering with addiction can tend to look for the easiest solution when times are tough or money is low- and if your vault is left wide open, you're leaving yourself vulnerable.
#4 – Resists Help or is Territorial
This is another point that speaks to the ‘secrecy’ problem. Be wary if you offer your bookkeeper assistance in the form of another employee to help handle easy tasks like payment posting or cutting checks, and the bookkeeper resists that help. People don’t generally turn down help when it comes to getting their work completed. They might have an ulterior motive for preferring to work on their own.
How Can Your Ensure Your Business is Protected?
If you want a foolproof option that can help grow your business- one that eliminates all chance of theft, consider outsourced accounting and bookkeeping. More and more businesses are using technology to their advantage by outsourcing with a virtual option- a solution that will never steal from you. Not only are the daily tasks automated, but as the business owner you always have an eye on how your financials are doing.
Botkeeper offers a virtual bookkeeping service which can handle the majority of the work done by a human without any risk of theft. Botkeeper also offers many other advantages, including reliable accuracy, cost-savings, 24/7 availability, and more. If you would like to forget about any chance of your bookkeeper skimming off of your bottom line, consider opting for a robot bookkeeper to handle your day-to-day tasks.
Editor's note: This post was originally published in of July 2017 and has been revamped and updated!