Keeping your company safe

In today’s fast paced business world companies large and small are dealing with growing pressures to do more with less and grow profits. The headlines are filled with companies or employees cutting corners to improve the bottom line and then the financial impact is seen. We saw this in the banking industry where banks loosened up their lending policies and moved funds around to cover bad debts. This started to the financial hardships of the housing and lending sector. Employees who were aware of these dealings did nothing and in some cases actually helped to cover many of the indiscretions. Then adding on to that were online scammers who saw this weakness took advantage of desperate home owners by offering ways to reduce their debt by paying a small fee to help them work with creditors.

There are hundreds of examples of how businesses are losing money. I saw one statistic that American businesses lose an estimated $900 billion a year based on fraud. This can be through executives adjusting the books to show higher sales or better tax rates than they actually incur. Employees stealing from their employers through falsified expense reports, inflated sales, or fraudulent invoices. You see stories where employees will contract with an outside vendor for millions of dollars to help provide supplies or work on a project only to later find out that they had family members that owned or worked for this outside company and stood to gain a lot of money. Many companies have a code of conduct and specific policies surrounding employee behavior and financial responsibility. The US government even created the Sarbanes Oxley Act that now holds executives and senior level leaders financially responsible for any financial misconduct.
While having a written policy on such actions may seem like the solution remember that many of the big companies that have now disappeared like Enron had written code of ethic. There are specific conferences likes the ones found here at that are growing in popularity to help small to large business owners gain an understanding on what can be done to help avoid such disasters. Once a company has been accused of financial impropriety they lose the trust of their employees and more importantly their customers.