Already Feeling £’s Lighter In The New Year?

I don’t know how it is in your business, but here at Virtuoso Legal, we see some issues which always arise after a holiday period…. 

On Tuesday of this week it was the phone call from the client about the employee whose dishonesty and financial theft came to light over the Christmas period. This time last year it was the former employees who didn’t come in after the Christmas period and not only took the database, but also were daft enough to take the whole server itself because they weren’t clever enough to take the data off it first!

This type of activity normally follows a pattern. Company money rarely disappears in big chunks – too obvious. Dishonest staff simply set up false accounts to pay themselves when on the accounts system it looks like they’ve paid a supplier. So it was on Monday when our client called a supplier to find out where materials were; only to be told that their account was on stop because of non payment of invoices. The accounts system showed the supplier had paid up to date. The problem was that the supplier hadn’t been paid as thousands had been siphoned off elsewhere. The dishonest employee was overseas. Luckily the bank have been very cooperative in locating exactly where the money went – not that they can easily get it back!

This brings me round to what you can try and do to protect yourself from these types of losses – and actually there IS quite a lot you can do. Here are a few suggestions:

  1. In the old days cheques used to be countersigned. These days that system rarely applies in business but it is worthwhile to do “spot” checks on payments on your system. If you are a business owner, then I’m afraid legally the book stops with you if there is dishonesty on the part of one of your staff so make sure you know what is going on. With cloud based accounts systems and online banking ensure you have your own log in and can see the movement of cash online. Set aside time now and then to look at where money is actually going. Is it the same account details for a payee every time? Or do payment details vary?
  2. Take up employee references. A few years ago, one client found out an employee had taken more than £3 million from the company over a period of 8 years. The Directors only became aware when HMRC called to collect their unpaid dues. When the lady was prosecuted for theft, the employer found out she had done it before! A simple reference check would have uncovered the fact that this “financial controller” had previous convictions for theft.
  3. Control access to key information. Allowing everyone access rights to key data such as confidential information, technical results, customer and supplier databases etc. is like leaving the door unlocked at night. Information is easily transferred onto USB sticks or uploaded to cloud access. With no monitoring system in place, it can be difficult to track what has been taken.
  4. All servers and cloud storage systems should have not only access permissions set on them but many systems allow a passive monitoring which means you can see what has been accessed and by whom. These types of security features are key when it comes to identifying what has been taken and when. In one case we found that over the Easter period one person had logged into the same account portal from an overseas IP address and had manually extracted information for 8 hours a day. This type of information is only kept for 7 days at a time so it is important to preserve it quickly.
  5.   If you do undercover some discrepancies, then do your research before you involve the police or your IT support. It is really important to preserve your data in such a way as to ensure it can be used in Court. If in doubt, then ask an expert.
  6.   Make sure you have proper staff contracts. A lot of businesses don’t have good contracts in place. If your staff have a proper job description, a clear contract and staff hand book which sets out expectations, there can be far fewer problems when it comes to disputes about what is or isn’t allowed on your systems.
  7.   If you have a big database, then “seed” the database with contacts who will come straight back to you if the database is copied.

Make or Break…

Staff can make or break a business. I’m fortunate in that I’m surrounded by people who are excellent at their job and trust worthy. However, that doesn’t make us complacent. Build a good strategy into your business and you’ll spend a lot more time on the important things in life and less on the things that make business so draining.

If however, someone has made your New Year difficult, we will do what we can to alleviate the damage and losses – give us a call on 0844 8008871. Find out more about our confidentiality (what is it and theft of it) and trade secrets service. 

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