December 04, 2018 10:56am
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ith the holiday season just around the corner, employee dishonesty and theft put your business at a higher risk than normal.

Jim’s shop is a thriving retail business that almost wasn’t thriving any more.  Jim received a call from his bank that his business checking account was overdrawn and they were transferring money from his savings account to cover a $4,300.00 overdraft.  Jim never overdraws his account! He may not check balances regularly, but he always has a good feel for the reserves in the account. 

What was happening? Jim has a good staff, some are newer working alongside his seasoned staff and they do a good job.  Staff is attentive to clients’ needs and regularly orders supplies and inventory. The annual festival was this weekend and Jim was aware they were increasing inventory for the expected increase in sales. This call still bothered Jim as he knew he had adequate balances to cover clearing checks.

Jim has a good relationship with his banker, Lisa, so he called her to discuss the overdraft and asked her to print out last month’s transactions.  A number of transactions did not look correct.  After Jim and Lisa both reviewed the transactions Jim new he had a much bigger problem than a small overdraft.

Upon review of six months of statements, Jim and his accountant had determined that he had questionable transactions which accounted for almost a $25,000.00 loss.  Unfortunately he discovered his bookkeeper had been writing checks to her grocery store, auto repair facility and charging some personal expenses to the company credit card; all for her own personal use. 

Jim called his Insurance agent to see if he had insurance to cover employee dishonesty.  He was relieved to find he had $20,000.00 of coverage in his policy.  As the investigation continued it was discovered that the bookkeeper stolen at least $30,000.00 that could be documented.  Jim was pleased he had $20,000 to reimburse his business for the loss by a trusted person.

Jim immediately took corrective action by firing the bookkeeper, contacting legal authorities, and hiring a new bookkeeper. He removed check signing authority from this position, and now has the check statement e-mailed to him at his personal e-mail address monthly to review. He is reviewing other options to prevent this kind of occurrence from happening again.

Jim’s agent is consulting with him on these important matters. Does your agent consult and discuss potential trust issues in your business with you? 

Contact your Trusted Choice advisor at Richey-Barrett Insurance for any of your small business insurance needs.

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