Employee Caught Stealing a Monitor

How To Prevent Internal Theft

Internal Theft 101: How it Happens and How to Prevent

When someone becomes part of your team, you want to believe that you can trust them, that they’re on your side, and that they’d never do something to negatively impact your business – like stealing. Unfortunately, that’s just not what the statistics show. Internal theft is a growing problem for US businesses, draining millions of dollars per year from profits.

“Employee theft costs businesses around $50 million each year.”

Internal vs. External Theft

While businesses expect to protect themselves from external theft with perimeter security fencing, video cameras, lighting, and more, many forget the threat lurking within the walls of their businesses. Internal theft by employees, their friends and accomplices, contractors, suppliers and service people. Anyone who has insider access and knowledge of a business can perpetrate internal theft.

  • Stolen inventory, tools or office supplies
  • Equipment theft  
  • Time theft – where an employee manipulates the time they are considered “on the clock”  
  • Cash theft – The most common form of internal theft  
  • Mishandling of company funds – Misuse of company credit cards, petty cash and expense sheets can add up quickly and is often never uncovered  
  • Major thefts – Employees may use their advantage of knowing your business’ weak points, schedules, and where the most valuable materials are kept to organize an after-hours heist.
  • Stealing customer payment information for personal use  
Warehouse Interior With Shelves and Pallets

“75% of employees admit to stealing at least once from their employers.”

How To Know If You Have Internal Theft

When a thief breaks into your business, you’ll know. Smashed windows, cut fences, and general disarray will make it inescapably obvious that someone has broken into your business. Internal theft, however, is much harder to detect. When determining if internal theft is a problem in your business, look for these signs:

  • Your cost of goods is increasing but your sales are staying the same
  • You notice things missing  
  • Your inventory numbers don’t add up  
  • Employees begin to report shoplifting incidents or missing items, especially if it’s only one employee who reports repeatedly 
  • Cash goes missing and/or sales drawers fail to balance regularly  
  • Friends of employees are seen hanging around your location often  

Protect Your Business From The Inside Out (And the Outside In)

Just as there are ways to keep external thieves out of your profits and off of your property, there are plenty of ways to prevent internal theft by your employees, contractors, and visitors to your business, too.  

  • Do background checks on new hires. Background check each person before you hire. Past criminal behavior is often the best prediction of future criminal behavior.
  • Train employees on loss prevention. Training your employees on loss prevention helps honest employees prevent theft and deters dishonest employees from stealing, knowing there are preventative measures in place.
  • Perform audits regularly. Inventory counts and accounting audits will reveal theft, help you see if there are any vulnerabilities in your procedures, and put a damper on employees’ temptation to steal.
  • Separate certain job functions. Checks and balances can help prevent internal theft. Separate job functions that could make it easier for an employee to steal, such as creating purchase orders, inventory, and bookkeeping. By doing all of those jobs, an employee could create a fake purchase order, sign off that the order was received, and pocket the money. Having different employees involved in each step helps prevent nefarious actions.
  • Use an inventory management system. An inventory management system logs the incoming and outgoing movement of inventory, so theft of inventory cannot happen without notice.
  • Install a video surveillance system. Video surveillance serves two purposes. For one, it can help you catch thieves in the act so you can recover your lost items and serve up repercussions to the offending party. For two, having video cameras prominently displayed at your location acts as a psychological deterrent to theft.
  • Secure your property. Internal theft doesn’t only happen during work hours. An employee, service person or contractor with insider knowledge of your business may find your business’ vulnerabilities and return after hours to exploit them. Keep your premises secure with a perimeter fence, adequate lot lighting, gate locks, and video surveillance.
Wisenet Security Camera

Does your company have vulnerabilities an employee could exploit?  

Find out with a complimentary Threat Assessment from the security experts here at AMAROK. We’ll help you find weak spots in your security before thieves do.