Catching an embezzler can be a complicated process as no business owner ever wants to discover that an employee is stealing from their company. But the sad truth is, it happens more often than we would like. Embezzlement can cause great financial loss and damage to a business’s reputation, so it is important to be aware of the warning signs and know how to prevent or catch an embezzler before they do too much harm. No matter the size of your business, employee embezzlement can be a great threat to its success. Whether it’s through skimming cash from transactions or stealing office supplies for personal use, such theft can have devastating effects on any organisation.

Types of embezzlement

To catch an embezzler, companies need to be aware of what embezzlement can look like. There are many different types of activity an embezzler may engage in. Some of them are:

  • Skimming cash from transactions
  • Stealing office supplies for personal use
  • Misusing company credit cards
  • Falsifying expense reports

Skimming cash from transactions

One of the most common methods embezzlers use to steal from their employers is skimming cash from transactions. This type of embezzlement involves taking money out of a company’s income without recording it in its accounting books or other records. It can be done through various ways, such as pocketing cash payments made by customers and not depositing them into the business bank account, under-recording sales amounts on receipts, or simply stealing funds directly from the cashier. To protect your business against such theft, it is important to understand how embezzlers skim cash from transactions and take preventative measures accordingly.

Stealing office supplies for personal use

Another common embezzlement tactic is stealing office supplies for personal use. This type of embezzlement involves taking items from the workplace, such as computers, printers, and other technology, to be used outside of work or sold for a profit. While this might seem like a minor crime in comparison to other embezzlement activities, it can still have serious consequences. Not only does it represent a financial loss for the company but it can also lead to decreased morale among employees who feel their hard work has been taken advantage of by someone else.

To prevent embezzlers from stealing office supplies for personal use, employers should take steps such as implementing security cameras and limiting access to certain areas within the business premises. Additionally, they should keep an inventory of all office equipment and regularly check that nothing is missing or unaccounted for.

Misusing company credit cards

Misusing company credit cards is another embezzlement tactic that can have serious consequences for businesses. This type of embezzlement involves the unauthorised use of corporate credit cards by employees or third parties to make purchases for their own benefit, such as buying luxury items or paying for personal expenses. This type of crime might have other employees covering it, especially if it involves expenses that benefit multiple individuals.

Falsifying expense reports

Falsifying expense reports typically involves inflating the amount spent on an item or service, submitting duplicate payments for the same purchase and claiming expenses related to personal activities instead of business ones. This type of embezzlement is often difficult to detect until after they’ve already taken place due to their subtle nature. It is also hard to tell what is a necessary cost and what is not.

To prevent such fraud from occurring in your organisation, you should ensure that all employee expense claims are thoroughly reviewed before they are reimbursed and establish a strict policy regarding what types of expenses can be claimed by employees. By monitoring all expenses, it will be harder for an embezzler to hide illegal activity and easier for the company to identify misconduct early on.

How to catch an embezzler

When it comes to embezzlement, prevention is always better than cure. By taking preventative measures such as implementing automated systems, performing undercover investigations and creating a culture of accountability within the workplace, embezzlers can be identified and handled before they cause serious financial losses. In the event that embezzlement does occur, businesses should have a plan of action in place to protect their finances and hold embezzlers accountable for their actions. With the right strategies in place, embezzlement can be prevented and businesses can protect their financial security.

But how do you catch an embezzler early? Here are some strategies a business can use:

  • Financial analysis
  • Undercover investigations
  • Automated systems
  • Tracking of patterns
  • Looking at behaviours

Financial analysis

One of the most effective ways to catch an embezzler is through careful financial analysis. By regularly reviewing and analysing the finances of a business, any discrepancies or irregularities in transactions can be identified quickly. Tracking patterns in spending can help identify potential embezzlers who are attempting to hide their activities by making multiple small transactions. Additionally, by closely monitoring accounts receivable and payable, embezzlers can be easily identified and their activities can be brought to light. To ensure that financial analysis is being undertaken regularly, managers can set up a consistent schedule with reminders.

Undercover investigations

Another way to catch embezzlers is through the use of undercover investigations. By deploying undercover agents, embezzlement activities can be tracked and monitored more closely. These agents may blend in with other employees or customers and observe their behaviour in order to detect any irregular activities that could be indicative of embezzlement. They may also use technology such as hidden cameras in order to capture video footage of embezzlers in the act. By maintaining a close eye on business processes and procedures, businesses can detect any attempts at embezzlement before they are able to cause significant financial losses.

This strategy should be handled carefully because in the case employees realise they are being investigated, while doing nothing wrong, they may feel hurt and untrustworthy from the company’s perspective. Thus, this should only be undertaken when there is a reasonable suspicion that embezzlement is occurring, and it should be conducted with the utmost confidentiality. Our customers trust Polonious when conducting different kinds of investigations as we handle every situation confidentiality and securely. 

Automated systems

Implementing automated systems to flag suspicious activity is an important tool for catching embezzlement. Automated systems are able to quickly detect irregularities and inconsistencies in data that may be indicative of embezzlement. By monitoring transactions in real time, any suspicious behaviours can be reported immediately and further investigated. Automated systems can also be used to detect any attempts at embezzlement by identifying discrepancies between expected and actual results. This allows businesses to take action quickly and find the root cause of the problem early.

Tracking of patterns

Tracking patterns in spending and accounts receivable/payable is an important step in catching embezzlers. By closely monitoring these figures, any sudden fluctuations or irregularities can be quickly identified and investigated further. This can also help detect embezzlements which have been camouflaged through false invoices or other deceptive methods. As such, it is important for businesses to monitor their finances regularly in order to identify any potential embezzlement attempts early on. To effectively track patterns in spending and accounts receivable/payable, it is essential for businesses to employ reliable accounting software and systems.

These tools allow companies to track all financial transactions accurately and efficiently so that they can easily detect any discrepancies or irregularities which may indicate embezzlement. These systems notify managers if a red flag has been detected so they can have a closer look.

Looking at behaviours

Embezzlers tend to act differently leading up to the illegal activity. A study has shown that embezzlers may show red flags like living beyond their means or showing signs of financial struggles. However, those do not guarantee that the employee may commit embezzlement. A combination of strong characteristics, like a close relationship with vendors, intimidation, refusal to share duties and constant questions for more authority may be a better indication that something is going on. It is crucial that employers handle matters with care so employees do not feel attacked or accused while not proven guilty. 

How to deal with an embezzler

Once embezzlement is suspected or discovered, it is essential to take quick and decisive action to deal with the embezzler. The first step is to investigate the embezzlement thoroughly and determine exactly how it occurred. This can be done through conducting interviews with employees and other stakeholders, examining financial records, reviewing security footage, and using advanced data analytics tools. It is also important to gather any evidence which may help prove embezzlement. This includes emails, bank statements, invoices, receipts, contracts and other documents which can provide further insights into the embezzler’s activities. Once enough evidence has been gathered to prove embezzlement, it is then time to take action against the embezzler accordingly. 

 Depending on the severity of the embezzlement and any applicable laws in the country or state, there are various measures which employers may take against an embezzler. These can range from issuing a warning or suspension for minor offences up to criminal prosecution for more serious cases. Additionally, businesses may consider reclaiming losses due to embezzlement through civil lawsuits filed against offenders or by suing third-party suppliers who were complicit in facilitating embezzlement activities. In some cases, employers may even be able to recover lost funds through insurance coverage if they have purchased a policy which covers embezzlement losses. 

 On top of legal actions such as criminal charges or civil lawsuits against an embezzler, companies should also consider taking internal measures such as implementing tighter controls on finances and strengthening internal audit processes in order to prevent similar incidents from occurring again in the future.

 Employers can also use this opportunity as a way to educate their staff on embezzlement prevention techniques so that they are better equipped to detect suspicious activity and report any potential issues promptly. Employers should also review their hiring policies and procedures regularly in order to increase their ability to identify those individuals who may be likely candidates for embezzling funds from a company. Taking these steps together with legal measures when dealing with an embezzler ensures that businesses reduce the likelihood of future instances of financial theft while also protecting their own interests at all times.

Final note

Embezzlement can be a hard crime to navigate. No one wants to admit that their own employee is stealing from them and it is a sensitive topic as suspicions may lead nowhere. As this is a type of fraud that needs to be investigated quickly, our customers choose Polonious since we offer faster turnaround times and lower administrative efforts and costs. We allow all evidence and relevant information to be stored in one place so they can be accessed from anywhere, anytime. If you want to learn more about how we can help you catch an embezzler, reach out and we are happy to chat!