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EDITORS NOTE: No one wants to talk about it but regardless of the business climate employees with fiscal responsibilities can and will embezzle
money. It can be alcohol and/or drug dependency, household financial hardship, gambling issues, divorce or just plain theft. The following will help identify the tell tale signs so you can help stop it before it puts you out of business. I’ve personally seen companies go out of business and I’ve seen companies make corrections and weather the storm either way if you’re a business owner or you plan on opening a contracting business in the future keep reading because this piece is immensely informative.
Twenty Ways Bookkeepers Embezzle from Plumbing Companies
This Article Will Focus on helping plumbing contractors to identify and stop profit leaks. It is the little leaks that sink the big ship…not the big holes…they are easy to see and fix! Since I will discuss some employee issues I recommend you consult with your employment attorney before taking any of the actions listed below.
If You Do A Google Search – “Plumbing Company Embezzlement” it will return hundreds of thousands of hits and most of them will tell similar stories of how it could have been avoided if the plumbing company owner knew about and followed a few simple guidelines.
The Top Twenty Ways
#01 – Don’t Hire A Bad Bookkeeper – Or a cheap one for that matter. How do you know if you are hiring a bad bookkeeper? There are several signs and one of the best ones is to simply ask how many plumbing companies or construction companies have they worked for in the past and google them, call the owner and ask if they are still in business. Don’t ask about the potential candidate you are interviewing until you have their permission to do so and your employment attorney says you can.
#02 – Understand The Employee Theft 10-10-80 Rule – This is a little harsh and I apologize in advance. It was discovered over many years of experience and first-hand observation by auditors, accountants, fraud examiners, anyone involved in detecting employee theft. I caution you to remember this Randalism “We live in a world of what is…not what should be”.
Ten Percent – Of all employees including bookkeepers that work at plumbing companies large and small, good and bad, prosperous and poor will steal. They do it in a variety of ways from office supplies, petty cash, graft, kickbacks and payoffs from your suppliers, vendors and sub-contractors. And they will get away with hundreds of thousands or even millions of dollars. They will do it regardless of how many security systems are in place because they lack integrity and have a “taker’s” entitlement paradigm which is I have coined into the Randalism “It Is Better To Take Than To Make”. They cannot be stopped, only caught! And only then if you have systems in place and if you can convince the criminal justice system to take action, good luck with that last part!
Ten Percent – Of all employees including bookkeepers that work at plumbing companies will not ever steal because they have integrity and a “Producer’s” paradigm the Randalism “It Is Better To Make Than To Take”. In the end these are the people who will add so much value to your company you cannot help but reward them with more money, benefits and recognition. Because if you do not they will be recruited by your competitors. This is another example of a concept I call “Leveling” which will be discussed in depth in a future article.
Eighty Percent – Of all employees including bookkeepers that work at plumbing companies will steal if they feel certain they can get away with it and if circumstances allow for it due to weak integrity and a Randalism I call “Redistributing The Wealth, But Not The Work Or The Responsibility”
#03 – Your Bookkeeper – Asks for signature authority on your checking / savings / payroll accounts in order to expedite payments on behalf of your plumbing company and save you time.
#04 – Your Bookkeeper – Has a lifestyle that seems above what they are earning. Did they recently buy a new car, truck, SUV, motorcycle or other toy? A word to the wise pay close attention to any employee who drives a BMW, they are beautiful cars and I understand lots of fun to drive…however, I know more than I care to say and will leave I at that.
#05 – Your Bookkeeper – Takes records home or worse yet takes a backup copy of the company QuickBooks file to work on and catch up on back-work. Or they want to work in the office when no one is around (Fraudulent activities are easier to do when nobody is around).
#06 – Your Bookkeeper – Refuses to take a vacation. Who will intercept the mail, phone calls and accept all those strange packages of personal goodies that seem to arrive for them at the office?
#07 – Your Bookkeeper – Gets defensive when you or your outside accountant asks questions. Wow, this is a huge red flag! I cannot tell you how many times this has happened. I have a list of questions that I use to lead them down the primrose path and in a number of cases they have been known to pack up and leave, in a big hurry!
#08 – Your Bookkeeper – Has access to your credit/debit cards. No, no, no and never! Unless your plumbing company is selling and installing over $10,000,000 every year there are simple and easy ways to streamline the entire bill paying process.
#09 – Your Bookkeeper – Receives mail-order packages at work. Hmm…got a new IPhone, electronic tablet or other toys at work because they did
not want to risk it being stolen from the front porch? Sounds good, smells bad! All of the major delivery services offer pickup at their satellite offices and most of them are open evenings and weekends. Everybody has a trusted friend or relative that can accept personal packages….no excuse to have anything personal sent to the office unless it is to establish a chain of custody.
#10 – Your Bookkeeper – Has QuickBooks in a complete mess and you cannot understand any of it. Then when you ask any questions they get angry and defensive and start telling how it is your fault, the plumbers don’t turn in time cards and purchase slips on time, the bank screwed something up, former President Bush is to blame or any number of excuses that almost make sense.
Randal L. DeHart, PMP, QPA