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That's a hefty $1 billion a week based on the most accepted and conservative estimates, says John Case, one of the nation's leading experts on employee theft.
At that rate, retail employees are a bigger problem than shoplifters. Retail workers steal roughly three times the amount taken by sticky-fingered shoppers, he says.
"The problem for small businesses is they don't have the checks and balances found in a large business," says Case, author of the popular manual, "Employee Theft - The Profit Killer."
For example, at a large business there is an employee who accepts deliveries, another to take inventory and a third to put the merchandise on the floor. At a small business, there is no separation of responsibility. Chances are good that the same person handles all three roles, points out Case.
In a small office, a similar situation occurs in accounting. One individual usually reviews the bills and prepares the checks without any supervision.
Small-business owners need to conduct regular audits to discover any problems. They should also educate employees on the cost of theft to the business and how it impacts their jobs in terms of salaries or job security, says Case, whose Web site can be found at www.employeetheft.com.
Law enforcement officials around the country are seeing the problem.
Prosecutors in King County, Washington, report cases of theft as large as $1.3 million and businesses bankrupted by a single employee.
Pat Sainsbury, chief deputy of the fraud division, has gone so far as to include a section on how businesses can prevent employee theft on the agency's Web site at www.metrokc.gov/proatty.
The most common form of theft at a small business is when a trusted worker takes larger or extra paychecks or writes checks to himself, to cash or to an accomplice, says Sainsbury.
To prevent this crime, the business owner or an outside accountant should receive the unopened bank statement and canceled checks each month and independently review the records, he says.
Sainsbury offers several other tips for business owners:
There's also a social obligation, he says. A business owner owes it to the next employer to do something about an employee who has a history of embezzlement, he says. Knowing that a business owner is tough on offenders also deters employees from stealing.
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