Small Biz: keep an eye on those business credit cards
I just read a story in the Dallas Morning News, detailing credit card abuse by DISD employees. The story claims that between January 2004 and March 2006, a reporter was able to identify $6.3 million in charges that violated state purchasing laws or school district policy. One DISD employee admitted recently to charging over $100,000 in personal charges on her DISD charge card!!
If your small business gives employees access to company credit, this story is an eye-opener. In 2004, the CFE (Certified Fraud Examiners) issued a report on “Occupational Fraud and Abuse” and their finding was mind-numbing: small businesses suffered a median loss of $100,000 annually due to employee theft, including credit card fraud.
Here are a couple things you can do prevent employee theft and credit card abuse:
- Give a company credit card only to the most trusted employees. However, even with those trusted employees, follow the Reagan Philosophy: “Trust, but verify”. Sometimes, the most trusted employee turns out to be the biggest credit card abuser.
- Look through your statements every month - little purchases …a doctor’s visit here, a movie there…suggest an employee may be “testing the water”. Small non-business charges are usually a red-flag for bigger charges in the future.
- Review your accounting methods and business policies on credit card use and hold your employees accountable: all purchases, or purchases over a certain amount, should require documentation to support the business-relatedness of the purchase.
- Take a look at this article on preventing employee theft - you will learn something new, I guarantee.
If you have concerns about stopping or preventing employee theft or credit card abuse in your business, it is best to speak with a small business attorney. The Attig Law Firm can discuss several options available to you to stop current abuse/theft and prevent future abuse/theft.
