4 ways to ward off fraud at your veterinary practice
No one wants to consider the possibility that their employees would steal from them. But the harsh reality is that it happens, every day. In fact, a survey conducted by the Association of Certified Fraud Examiners (ACFE) in Austin, Texas, showed that businesses lose about 5 percent in annual revenue to fraud—an average of $160,000. According to a recent article in The Street, that’s more than $2.9 trillion when applied to the estimated 2009 gross world product.
To help you safeguard your veterinary practice, here are four smart practices Ken Springer, former FBI fraud investigator and president and founder of Corporate Resolutions Inc., a New York-based company that investigates fraud reports, shared with The Street.
1. Conduct background checks
Always conduct a background check when considering a potential employee. You'll be amazed at what you find. Even though more than 85 percent of swindlers have never been charged or convicted for a fraud-related offense, according to the ACFE, you’ll still spot red flags if they’re there. For example, a recent ACFE study reports that swindlers have a tendency to live beyond their means (43 percent of cases) and experience financial difficulties (36 percent of cases.)
Click here for Mark Opperman's real-life horror stories regarding background checks, along with information on how to conduct your own.
2. Bump up security
We’re not saying you have to install video surveillance to keep employees on the up and up (although some practices do—click here for how they go about it.) But setting up a system of checks and balances is must. Think about it. Embezzlement only happens when the books aren’t double- or triple-checked. So curb employees’ temptation to steal by requiring team members to verify each other’s work when it comes to money and inventory.
More than 80 percent of frauds in the ACFE study were committed by people in one of six departments: accounting, operations, sales, executive or upper management, customer service, or purchasing.
3. Invest in fidelity coverage
Fidelity coverage is your insurance against insurance fraud. In other words, it covers you in case an employee robs you blind. And like most other insurance plans, it’s well worth the extra money you’ll need to put into it.
4. Protect whistle-blowers
Team members are your eyes and ears. If something fishy is going on in your practice, it’s safe to assume that someone knows and wants to tell you. But unless you have a system that enables employees to feel they can talk to you without being pegged as the practice rat, they’ll stay silent. Springer told The Street that businesses should consider hiring a third-party to handle all allegations. According to the ACFE, such a system can be more effective than an audit.