How Can I Prevent Employee Fraud at my Manufacturing Plant?

Posted by Sean Murphy on December 26, 2018

According to the Association of Certified Fraud Examiners (ACFE), internal fraud bleeds nearly $4 trillion a year from businesses across the globe. Even though companies can experience theft from outside sources like vendors and customers, the highest losses can be attributed to employee fraud. The severity of the crime can be as small as stealing company supplies or as large-scale as financial statement fraud. Fraud by upper management can lead to higher losses because their credentials allow them to easily falsify financial, credential or other work-related documents for personal gain.

To help companies combat the problem, the ACFE published a series of security measures to deter internal theft at manufacturing plants. First on the list is to improve internal controls. By this they mean to not have the same employee keep books, collect funds or write checks. Additionally, the business should schedule a monthly bank statement to be delivered, unopened, to the owner, who can check the statements to make sure everything looks as it should. Background checks on new employees and fraud audits by an outside accountant are second and third on the list.

The responsibility to deter internal theft shouldn’t fall solely on the business owner. The ACFE recommends employees go through ethics training to learn where fraud can occur and its associated consequences. For example, reducing internal fraud could result in higher salaries, however, if the opposite occurs, there could be job losses.

After employees complete a thorough ethics training, the company may want to offer an anonymous way to report fraud, either via a hotline or website portal. Most employee theft incidents are discovered because other employees report what they know.

Don’t be afraid to prosecute anyone caught helping themselves to company money or supplies. Some companies avoid legal action because they are worried the publicity will negatively impact the business. Legal action is crucial because it makes an example of thieves within the company.

Another way to help prevent internal theft is to install a surveillance camera system at your manufacturing facility. There are two types of systems: reactive and proactive. A reactive system simply responds to a situation after an alarm is triggered and usually after a crime has been committed. A proactive solution is one that acts while a crime is in progress, often before damage is done and suspects leave the property.

So, how does it work? One of our Stealth Monitoring trained security specialists will visit your facility to discuss your needs and budget. From there, he will design a customized solution just for you, including strategically placed cameras, audio speakers, access control if necessary, and a schedule for live video monitoring hours. Once the system is in place and goes live, trained security operators can watch those cameras in real time, often from vantage points that aren’t accessible to an on-site guard. If they see something out of the ordinary, they can activate a speaker warning or call property management and local police.

Even when the surveillance system operators aren’t watching live, the security cameras are still recording. As part of our world-class service, we offer a video review service which encompasses a team of analysts who will sort through footage and pull relevant clips of any incidents in question. This can prove beneficial for insurance claims and police investigations.

In the following video, watch as a driver hits a stack of inventory at a client’s property. Identifying information such as facial features and license plates can be used to determine who is responsible for property damage and theft, however we have blurred that information for anonymity.

Employee fraud is a large contributor to losses associated with theft for manufacturers across the United States and Canada. Business owners can help deter fraud by keeping their employees accountable and utilizing a proactive video monitoring solution.

If you would like more information about live video monitoring and what it can do for your manufacturing property, click here.

Posted in: Crime Prevention, Video Security Systems, Security Guards & Savings, Security Tips, Video Monitoring