Business Advice: What to Do When Embezzlement Occurs

Money can be a great temptation, and some give in to it. You caught your business partner stealing money from the company bank account? What will you do? This has noticeable impacts and might affect your business’s future. Theft is a severe offense, and those who commit it will face criminal and civil prosecution.

You, as a business owner, will face inspections into your own financial dealings. And sometimes, it will damage your reputation and the company. Often, it results in a probable failure to pay creditors and bankruptcy in the long run. Once you find out about your partner’s theft, follow these steps.

  1. Gather Proof

You need evidence. Evidence must be provided to establish the theft. It is to drop the aspect of typos, accounting errors, or missing bookkeeping entries. During this investigative stage, ask questions rather than accuse.

A good piece of evidence may be capturing your partner taking money on a surveillance camera. Yet, this evidence will be inconclusive. You may need to compile documentation. Get canceled checks from your bank, or inspect financial statements. Questioning employees for what they may know is a crucial component of detecting embezzlement as well.

  1. Seek Legal Advice

If you have a hard time gathering evidence on your own, it is better to consult for legal advice. Involve your attorney as soon as possible for guidance, especially in urgent instances. Your attorney should assist you on how to start an investigation, collect evidence, when to contact the authorities, how to deal with your partner, and how to tell other parties.

If the embezzlement involves a massive amount of money or a consistent fraud trend, contact an attorney immediately. White-collar crimes, such as check forgery or fraud schemes, are pretty complicated. Corrupt individuals become experts at concealing their trail.

This is a sensitive issue that needs careful preparation. There might be a need to cancel checkbooks and debit or credit cards for the company account. And change the authorization, so your business partner cannot transfer cash with their sole signature. It may be recommended that you perform an unbiased internal inquiry within your company, including auditing finances. You and your attorney will need to agree on a procedure for acquiring and recording any evidence you uncover so that it may be handed on to the authorities if it is required.


  1. Report to Authorities

Depending on your goals and the gravity of the situation, you may be able to file a complaint in either a criminal or civil court. The standard of proof required to start a civil action against a business partner is less than what is demanded by criminal prosecution. A civil court seeks evidence on a balance of circumstances, but a criminal prosecution requires proof beyond probable doubt.

Many business owners, particularly smaller companies, neglect to report embezzlement and employee theft. That is a mistake. All embezzlement and employee theft cases involving significant amounts of money should be reported to the authorities. It might be the only option to get compensation. Your employees must understand that you take theft seriously. You don’t want others to think they can get away with it. Furthermore, you wouldn’t want the embezzler to continue dealing with an unaware future business partner since there is no public record.

  1. Hire Process Servers

Filling in court usually requires going to the court clerk, paying the filing fee, and complying with the court’s specific filing procedures. Instead of doing all this work yourself, consider hiring a process server for court documents, for example. They can assist you in submitting necessary forms and paperwork at a court.

They also serve summons, notices, and other essential documents to persons involved in court proceedings. And yes, it is an element of the American legal system. Process servers are also in charge of delivering the appropriate papers to your business partner. It is to ensure they know the case you filed against them.

  1. Begin to Recover Your Losses

Start by making sure the same thing doesn’t happen again. Change internal processes to reduce access and temptation. Set up your checks and balances. For example, to improve security, install surveillance cameras.

Division of responsibilities is also required. Never give a single person total management of finances without monitoring. One employee should execute transactions, while another should balance the bank account and create accounting entries. If your business is small, you may do one of the roles personally. When adequate checks and balances are in place, the possibility for temptation and access to cause damage is reduced.

If embezzlement occurs, the quicker you respond, the better you can defend your company. And the sooner you cut your losses, the better. Furthermore, workplace theft may devastate a company and create a crushing strain on you as the owner. Delay adds to the agony, so better do these steps with confidence.

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