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Sonitrol Commercial Security Blog ... by Joe Wilson



5 Types Of Employee Theft Your Business Should Watch Out For

Posted by Joe Wilson

Jun 25, 2021 8:11:59 AM

Employee theft is an unfortunate reality that business owners need to prepare for. You may be thinking, “my employees would never steal from me.” But internal theft is more widespread than you may think… and there are different ways your employees may be stealing from your company

In this blog, Sonitrol Western Canada has listed the top five most common ways that staff might be misappropriating resources. 

  1. Skimming 

Skimming is a type of fraud where your staff member takes cash before it is entered into the books. When this happens, you may see cash register imbalances. In fact, skimming often looks like simple human error until the employee starts increasing what they take. 

In more complicated skimming schemes, your employee may try to offset the missing amount by applying a coupon code to a purchase but charging the customer the full price. It could also be covered up by deleting a paid invoice or creating a false credit memo to avoid customer accounts from getting flagged as past due. This can be harder to spot. 

  1. Under ringing

This is a popular form of employee theft where the cashier charges your customer for the proper number of items purchased but rings less in the till. For example, your customer comes in to buy six items. The cashier charges for all six items but only inputs five items. They then pocket the cash difference. 

This form of fraud is harder to spot as you won’t notice anything is wrong until you perform an inventory check or you sell out of a product that could still be in the system. 

  1. Product theft 

This form of theft is when an employee takes items from your business. This can include “free” food at a restaurant, products in a retail environment or even office supplies. While the items may be small, eventually the losses will add up or employees will get more confident and begin to steal large items. Any product theft will impact your profit margins.

  1. Sweethearting 

Sweethearting is a form of theft where your employee gives their friends and family discounts or merchandise. This is often covered up by voiding scans, failing to scan items or giving a refund without taking back the item. Overriding prices is also a common form of sweethearting. 

If you have an employee who is sweethearting, you may see inventory shortages or a high number of voids and overrides. 

  1. Time theft 

This theft isn’t related to physical property but wages. It happens when employees arrive late, leave early or take long breaks while you are compensating them. This form of fraud is harder to spot because you must catch your employee in the act. 

The problem with employee theft is that it could be mistaken for human error, while at the same time human error could be mistaken as employee theft. So, to help prevent theft, minimize human error and identify the real cause, consider these tips:

  • Ensure you have enough staff on busy days so that your team doesn’t get overwhelmed. If you are understaffed, you can increase the risk of errors and provide an opportunity for staff members to steal. 

  • Don’t let staff share tills. This can provide your employees with an opportunity to steal cash without you knowing who caused the shortage. 

  • Be sure to control access with keyless security. This includes physical access, such as locked rooms with key card access for high risk or high value inventory. It also refers to digital access. This means that you should limit access to bookkeeping records to your accounting staff. If your team needs to use your accounting software for other purposes, limit what modules they have access to. 

  • Don’t depend on staff members to record their own hours. Instead, consider keycards that will track when employees check in/out and enter/leave the premises. 

  • Require manager approval before an employee can override a price, void a transaction or refund a product. That way they can ensure every step was followed. 

  • Don’t allow staff to transact with family members and friends. When possible, have related customers deal with a different staff member or a manager. 

  • Provide proper supervision of staff to ensure that they are working during working hours and not taking advantage of your business. 

  • Install a verified security system. This will give you oversight of your business even when you can’t be there and will not only deter employee theft but prevent customer theft and increase your staff and businesses safety in an emergency. 

  • Record all processes and procedures, keep them up to date and train your employees on them. This will help prevent process errors and create accountability that will help deter theft. 

Employee theft is a real issue and while you want to be able to trust your team members, you also need to protect your business. Being aware of the different forms of theft and signs that they are happening is important. But more importantly, you need to take steps to protect your business from internal and external threats. 

For more information on preventing employee theft or to get a commercial security audit, contact Sonitrol Western Canada today

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Joe Wilson, Owner of Sonitrol Western Canada

We provide our customers with the best commercial security solutions and quality service backed by our unique Guarantee and Commitment to Service. It's something unverified conventional alarm companies simply cannot guarantee!

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